Tax deductions for self-employed workers
Individuals who are in business for themselves enjoy several benefits, ranging from setting their own hours and wages to making key decisions about how they operate. However, there are also some drawbacks, such as a lack of access to employer-sponsored healthcare and retirement accounts. In addition, the cost of running an office can be financially burdensome if business is experiencing a downturn. To counteract some of these expenses, self-employed individuals should be aware of the various tax benefits for which they qualify.
The first and most recognized tax break for self-employed adults is a home office deduction. Those who use their homes, garages or basements "exclusively and regularly" for work purposes and meeting with clients can write off the costs incurred to maintain these spaces. Workers should keep in mind that this deduction is only applicable to the portion of space they use for their office, rather than their entire property. The tax break allows them to deduct several costs, including rent, utilities, maintenance, insurance and repairs. While this write-off is perfectly legitimate under IRS rules, workers should keep detailed records of their expenses and speak with a tax preparer to ensure they meet all the IRS eligibility stipulations.
Second, self-employed adults may also deduct office supplies and equipment needed to perform their work functions. This may include office furniture - within reason - such as desks, filing cabinets, printers, computers and tablets. In addition, basic office supplies, such as pens, calculators and paper may also be written off.
Transportation is an overlooked deduction self-employed individuals are entitled to. While workers who have an office away from home may not deduct the cost to commute - as this still considered a personal, rather than business expense - they may write off the costs of traveling to meet a client, conduct research and complete other business-related tasks. The standard mileage rate for business travel in 2012 is 55.5 cents per mile. Further, self-employed workers who travel via plane or train to meet clients or attend conferences may also deduct transportation and hotel costs, and some meals.
Lastly, health insurance can be expensive for self-employed individuals. Those who pay for their own insurance and were not eligible for coverage under their spouse's plan may deduct premiums for health, dental and long-term care insurance.
Liberty Tax Service provides computerized income tax preparation and electronic filing. Each tax office offers customers audit assistance, a money back guarantee, and free tax return checking.
About Liberty Tax Service
Liberty Tax Service is the fastest -growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 8,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.
Liberty Tax Service is the only tax franchise on the Forbes “Top 20 Franchises to Start,” and ranks #1 of the tax franchises on the Entrepreneur “Franchise 500.” Each office provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax.