Five Tax Deductions Independent Contractors May Be Missing Out On
Taxes can be complicated for self-employed individuals. From making sure all of your forms are in order, to setting aside money throughout the year to pay taxes, there are many steps to take to file taxes as someone who is self-employed or as an independant contractor. Independent contractors are, however, eligible for many 1099 tax deductions that they may not be taking advantage of. If you’re an independant contractor hoping to maximize deductions this tax season, you may be eligible for the following deductions.
Continuing Education and Certification Costs
In order to remain on top of your professional game, it’s important to continue learning about your profession. Whether there are major advancements in your field or new areas to explore, continuing education can help you remain up-to-date competitive among professionals in your industry.
College classes, special seminars and even weekend programs intended to maintain or improve your skills for your work can be deductible. The only exclusion is learning about a new profession. Only educational costs associated with your current line of work can be deducted.
Deductions for Your Home Office
Although some people who are self-employed rent office space, many of them work from a designated space in their home. If you are one of those people, you might be missing out on major deductions. If there’s a space you use exclusively for work and it’s your primary place of business, you can typically write off a portion of your rent or mortgage commensurate to the percentage of space used for work. If that’s too complicated, you can go with a simplified method, where you use the IRS set rate of $5 per square feet, for up to 300 square feet per year.
Organization Fees, Dues, or Membership Costs
If you belong to professional organizations, the amount you pay to retain your membership is often tax deductible. For some professionals, such as real estate agents or doctors, those memberships can be costly but necessary for professional opportunities.
Similarly, if you subscribe to any trade publications, those expenses for your business are deductible. Event services you need to keep your business running, such as social media management or website expenses, can be deductible.
Travel, Including Mileage and Parking Fees
Many people already know that there are deductions for mileage when you drive for your profession. You can use the standard mileage rate, if you track the number of miles you drive for work. For each mile, you can write off $0.54, which is meant to cover insurance, gas, wear on your vehicle and maintenance. If you have to pay for parking, which is common in big cities, your parking expenses are also deductible.
If you take the train or a plane to attend a business meeting or convention, those expenses are also deductible. Rental cars, cabs and even hotel rooms from business travel can be deductible expenses as well.
Health Insurance Premiums
When you’re self-employed, one of the biggest expenses is often losing out on employer-sponsored health care options. Instead of paying a portion of your premium, you have to pay for it all. That can amount to hundreds of dollars each month. Thankfully, you can write those costs off. Even better, if your business made a profit, you can report your health insurance premiums on your 1040 form instead of your Schedule C.
There are a host of potential write-offs and deductions for the self-employed. Being aware of possible deductions can help you save some money in taxes in the long run. If you would like to benefit from these deductions but don’t know where to start, Clear Accounting Services is here to help. Contact us today to learn more about our in person and online accounting services!