Self-employed tax filers face challenges and opportunities at tax time. It takes some work to document and claim all tax-deductible benefits. But the pay-off can add up to significant savings. Before finalizing your tax information, see if you can claim the following write-offs:
- Health Insurance
This year, you’ll have to answer the question about medical insurance coverage on your tax return. Health insurance premiums paid may count as a tax credit (even better), and not a deduction.
If you took an online (or in-person) course or seminar for anything that helps you run your business; the cost is a deduction. The same goes for purchase of video, audio, or written materials. Memberships or subscriptions related to your profession are also deductible.
- Retirement Account(s)
A traditional 401(k) plan lets you defer income and therefore pay no immediate tax. For 2014, the maximum is $17,500 plus 25% of net income. A SEP IRA (Simplified Employee Pension IRA) is even more generous. The 2014 contribution limit is the lesser of $52,000 or 25% of income.
- Business Expenses
In addition to air fare, car rental, hotels and meals, remember mileage logs. The mileage rate for 2014 is .56/mile. Or, if you use actual expenses instead of mileage, you can write off interest expense on car payments, maintenance and repairs, registration, license plates, insurance, tolls and parking, and depreciate your vehicle. If you don’t already have a good system for saving receipts, set one up for 2015. Electronic receipts saved in one place will make your tax prep easier next year.
- Home Office
The IRS allows the business use of the home as a tax deduction. If you qualify, then you can write off the expenses that relate to the business space of your home.