There are about 12 million people and thats roughly about 2/3 of the working class that is self-employed. A lot of the tax codes are available to help the small business owners and self-employed unlike the W2 that the average employee receives. No matter if you are working full time or part time for yourself, you should take advantage of the tax benefits that the IRS and the Federal government provide for you.
Deductions for Retirement Plan is a line deduction. If you made any contributions toward a retirement plan that is qualified like a SEP IRA or a Keogh Plan, then you can deduct the contributions that you made. You will have to add up your total amount of earnings and subtract your expenses, subtract the 50% self-employment tax and lastly deduct the amount you paid into your retirement plan.
Home Office Deduction can be used for those people that work only from home and it doesnt matter if you own or rent your home. This subtraction would be applicable for rent, mortgage, insurance, and utilities and if you have property tax as well. You have to take the percentage of the total square feet of the workspace that you use and apply it to your expenses. Please be cautious with this one because this deduction for some reason often sparks an audit so, if you use this deduction, be sure that you have proof as to why you are able to use this subtraction. It is important that your home office deduction isnt more than your income total. The deduction that you claim is limited to the income that you actually earned.
Using your internet and your phone for your business is a business expense that can be used when filing taxes. If you use your internet and phone for both business and personal then you deduct the percentage of time that you use for personal from business and you use that amount as your deduction.
Do you need to travel for business? If your answer is yes, then you can deduct that entire cost of travel if you traveled out of town and if you stayed the night and had to get a room then you can deduct that also. Im sure that this trip included you eating and entertainment; add that to your deductions as well. Doing a little tax and financial planning can go a long way in helping you get the most deductions possible for your business.