What are Some Tax Deductions for Self-Employed Individuals?
Tyngsboro Resident Looks for Help
For small business owners and other self-employed individuals or contractors, there are many tax deductions available. These include things such as a home office, internet, phone, office supplies used and even business travel expenses. By itemizing these items on your tax return, you can see a substantial savings.
A Tyngsboro resident had recently started his own business venture and was looking for help find tax deductions that might be applicable. He sought the advice of the tax experts at Merrimack Tax Associates.
Any work space where you regularly conduct business can be deducted from your taxes. This home office expense can also include any area in the home that is used to store items for your business. This deduction applies whether you own or rent the home.
Internet and Phone
The monthly expenses for internet and phone service, when used for your business, are also eligible for a tax deduction. If shared, you should estimate how much of the service is used for business purposes versus personal and deduct this amount on your taxes.
Health Insurance Premiums
As a self-employed business owner, you may have health insurance through a spouse’s employment. However, if you are paying for your own health insurance you can deduct these premiums on your taxes, including any that are used to cover a spouse and dependent children.
As a business owner, the travel that you put on your personal vehicle for work purposes is tax deductible. This expense also includes automobile rentals for business purposes and public transportation.
If you have a loan from a bank for your business, the interest that you pay on the loan is tax deductible. This can also include credit card interest, but it is limited to interest on the purchases that are for business expenses only.
Retirement Plan Contributions
Money put into SEP-IRAs, SIMPLE IRAs, and 401ks are all tax deductible for self-employed individuals. This not only saves you money now, but you can also accumulate tax-deferred investment gains for the future.
As the Tyngsboro resident discovered, there are many tax advantages for the self-employed. By taking advantage of these when filing his taxes, he can enjoy a significant tax savings.