Dec 22 2008
Self-Employed? What deductions have you missed?
So many are giving self-employment a go these days and with the unemployment rate rising each day how could they not. When you are self-employed you work for yourself and are responsible for keeping accurate records of income and expenses. You are also solely responsible for reporting that income anfter exspense on your tax return, usually on a Schedule C.
Now there are deductions that are obvious to most and that includes the cost of your goods, if any; rent and utilities, if you operate outside of the home; buisness mileage and hotel stays, if your work requires traveling; and buisness lunches and phone bills.
Other deductions that are often missed can make a huge impact on your adjusted gross income and self-employment tax amount. These would include; tax preperation fees, if you filed on your buisness the year before and paid someone else to prepare it; insurance on your goods or space; employee pay (if you withhold taxes, provide the work area and tools and the job they perform is recurring, otherwise they would be a 1099 (contract) employee; one half of your self-employment tax is also deductible from your adjusted gross income.
If you go to a professional tax preperation service, odds are they will know which deductions you can and can not claim. Always keep immaculate records that are stored seperate from your personal records, and read up on current tax changes just in case that professional missed something you are eligilble to claim.
If you do your own taxes then make sure you make a quick stop at the IRS web-site to brush-up on changes and requirements
