5 Legal Tax Deductions For The Self Employed
Looking for 5 legal tax deductions for the self-employed? There are many expenses involved with being self-employed, which leads many individuals to search for legal tax deductions for the self-employed. It is important to ensure that all deductions are included to keep as much money as you can to operate your business. The following 5 legal tax deductions should be first on the list of any self-employed business owner.
- Medical and dental expenses top the list of the 5 legal tax deductions for the self-employed. These are often-overlooked deductions that can really add up. The IRS website states that insurance premiums can also be included in the deductions with the exception being a plan provided by an employer. For self-employed individuals, this can mean money back into the business.
- If the unthinkable happens: someone breaks into your home or there is a fire or some other major disaster. The Internal Revenue Service has special rules for sudden, unexpected and unusual casualty or theft losses. To be considered as legal tax deductions for the self-employed, these occurrences must be sudden. Therefore, a leaking roof or termite damage that causes damage to equipment would not qualify because these events are not sudden or unexpected.
- Those who have joined the latest multi-level marketing, pyramid or Ponzi scheme have most likely parted ways with their money. The Internal Revenue Service allows self-employed people to deduct for losses attributed to these scams. Many self-employed individuals start out using one of these plans and learn of their folly the hard way. The added benefit is that losses from these schemes are not subject to the two percent withholding rule. This unknown deduction is an excellent example of a legal tax deduction for self-employed individuals.
- Did you hit the books to start that new business? Education expenses can be deducted up to four thousand dollars. This can be a major legal tax deduction for many self-employed individuals. The key is to ensure that the educational expenses are work-related. To simplify the matter, a person cannot deduct for culinary classes if they operate an accounting business. The amount of money self-employed individuals save makes this an excellent example of a legal tax deduction for the self-employed.
- One of the more popular legal tax deductions for the self-employed is the Business Use of Home deduction. Many self-employed individuals either operate a home business or serve as independent contractors for a home office. The Internal Revenue Service also states that deductions can be taken for storage, rental purposes or for the provision of daycare services. The Internal Revenue Service states that in order to utilize this deduction, the home business must be the primary place of business or primary workplace; be the place where you conduct business with clients, customers, patients, etc.; and if the area that you operate out of is separate, then it must be connected with the business.
Self-employed individuals need to save money. These 5 legal tax deductions are quite common. It is always best to consult the IRS.gov website to determine if your deductions are included in the list of legal tax deductions. There are also comprehensive tools on many other sites. A self-employed person may also want to consider contacting an accountant to ensure compliance with applicable tax laws.