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13 Top Deductions of the Self Employed

The Huffington Post The Huffington Post 22/03/2016 MoneyTips

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Working for yourself can be very fulfilling, but it requires attention to detail -- especially when it comes to your taxes. The tax challenges of self-employment make it even more important that you take advantage of every bit of tax savings available to you in order to keep your business in sound financial shape. Start with these 13 deductions.
1. Retirement Plans - Typically, a retirement plan is the best tax advantage available to independent contractors. Save for retirement, accrue tax-deferred growth, and gain tax deductions -- it's a win-win-win situation. Qualified plans include 401(k)s, SEPs (Simplified Employee Pensions), and SIMPLE (Savings Incentive Match Plan for Employees) IRAs.
2. Self-Employment Tax - Bad news: You pay employer and employee taxes, since you are both. Good News: The half of your self-employment tax that you pay as an employer is deductible.
3. Home Office -Home office deductions receive greater scrutiny these days, but if your office meets the criteria in IRS Publication 587, "Business Use of Your Home," take advantage. The home office must be your principal place of business and be used on a regular basis for business purposes only.
4. Depreciation - Assets used only for your business can be depreciated if they have a life of greater than one year and are used to generate income. If you use equipment for both home and business, consult IRS Publication 946, "How to Depreciate Property," to see if depreciation applies in your case.
5. Health Insurance Premiums - You may be able to deduct health insurance premiums for you, your spouse, and your dependents if you meet certain sets of criteria. See IRS Publication 535, Business Expenses" for details.
6. Communications Expenses - Communication-related bills such as Internet access and cell phone service are deductible in the proportion that they are used for business. Ask for a partitioned bill from the providers when possible. Otherwise, it may be hard to prove the percentage of business use.
7. Mileage - Driving expenses related to business can be deducted at the standard mileage rate of 57.5 cents per mile for the 2015 tax year. Otherwise, you can deduct actual expenses for fuel, licensing, maintenance and repairs, and depreciation. In both cases, keep business and personal use expenses separate.
8. Other Travel Expenses - Business-related travel is 100% deductible. The corresponding meals and entertainment expenses are 50% deductible.
9. Bank Fees - As a self-employed individual, you may be able to deduct certain bank fees if you keep your business and personal bank accounts separate, as well as the associated transactions.
10. Educational Expenses - Expenses that help to expand your business-related knowledge such as seminars, dues and subscriptions, and continuing education classes in your line of work are deductible. They must be related to your profession to qualify.
11. Interest - Interest on loans and business-only credit cards are deductible -- but again, it is important that these loans and credit cards are strictly and purely applicable to your business.
12. Office Supplies - Non-depreciable business items may be deducted as standard business expenses, assuming they are purchased only for your business. Keep your receipts as proof.
13. Advertising and Promotion Costs - A broad variety of advertising expenses can be deducted, from simple business cards to full media With superior recordkeeping and strict separation of personal and business expenses, you can claim the above expenses and increase your tax savings. The same attention to detail that makes you a good business owner will make you a good tax analyst -- at least for your own tax return.

This article was provided by our partners at moneytips.com
To read more:
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