Self-Employment Deductions

Self-employment deductions refer to business-related expenses that can be subtracted from your self-employment income to reduce your tax liability. This includes expenses such as office supplies, business use of a home or car, health insurance premiums, and others.

What deductions can self-employed individuals claim on their taxes?

Self-employed individuals can claim a variety of deductions on their taxes, including:

  • Business expenses, such as office supplies, equipment, and travel expenses
  • Home office expenses, if you use a portion of your home exclusively for business purposes
  • Health insurance premiums
  • Retirement contributions, such as to a SEP-IRA or solo 401(k)
  • Self-employment taxes, which are the equivalent of Social Security and Medicare taxes for employees

It's important to keep detailed records of all expenses related to your business in order to accurately claim deductions on your taxes.

Can self-employed individuals deduct their vehicle expenses?

Yes, self-employed individuals can deduct vehicle expenses related to their business, but only for the portion of the vehicle's use that is for business purposes. This can be calculated using either the standard mileage rate or actual expenses, such as gas, maintenance, and repairs. It's important to keep detailed records of all vehicle expenses and the purpose of each trip in order to accurately claim this deduction.

Can self-employed individuals deduct their home office expenses?

Yes, self-employed individuals can deduct their home office expenses if they use a portion of their home exclusively for business purposes. This can include expenses such as rent, utilities, and repairs. The deduction can be calculated using either the simplified method, which allows for a deduction of $5 per square foot of the home office space, or the regular method, which requires calculating the actual expenses related to the home office. It's important to keep detailed records of all home office expenses in order to accurately claim this deduction.

Can self-employed individuals deduct their health insurance premiums?

Yes, self-employed individuals can deduct their health insurance premiums as a business expense. This deduction is taken on the front page of the individual's tax return and is not subject to the 7.5% adjusted gross income threshold that applies to medical expenses for individuals who are not self-employed.

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