Yahoo Finance The tax deductions you need to know if you're self-employed
We’re deep into tax season and Yahoo Finance is answering your tax questions as we reach the April 15 deadline. For taxpayers who are self-employed, taxes can be challenging, especially when it comes to knowing what you can deduct.
While the Tax Cuts and Jobs Act that passed at the end of 2017 affected people who work from home but are employed by a company, if you’re self-employed, there are still deductions available to you. Sheila Brandenburg, a CPA in New York City, says that while it depends on your industry, there are a few things to keep in mind about deductions.
“Think about a home office: do you have a dedicated space in your home you’re using for your business?” Brandenburg says. If you’re self-employed, you can deduct your home office by filing Schedule C, Sole Proprietorship on your tax return.
Another important deduction are meals, but they must be business meals where you’re discussing business matters, Brandenburg says. You are able to deduct 50% of these meals. It’s important to keep the receipts and a record of who you met with and what you discussed, Brandenburg says. Having credit card statements is not enough to prove the deduction, she says.
Finally, look at the money you’ve spent on office equipment. You can write off up to $1 million on equipment like computers, printers and office furniture.
Brandenburg says keeping accurate records is critical for taxpayers who are self-employed.
“The first thing you should always do is get an invoice out to your client, and then you will get a 1099,” she says. “Whatever type of expenses or money you're laying out for your business, keep track of it—document it and scan them.”
Self-employed workers also pay estimated taxes throughout the year, so Brandenburg says it’s important you’re paying accurate amounts so there are no surprises.
Have more questions about your taxes? Email us at moneyquestions@yahoo.com
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