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Wednesday, March 26, 2008

Tax Deductions For the Self-Employed and other Job Related Deductions


If you own a small business or home based business, you can deduct just about all of your business expenses. Here are some to keep in mind:
  • Office supplies
  • Postage
  • Shipping supplies
  • Tools & materials
  • Work uniforms (not suitable for every day wear)
  • Safety equipment (hardhats, safety glasses, etc.)
  • Advertising/promotional costs
  • Computer & internet
  • Cell phone (used primarily for business) And long distance business calls, and a separate business line at your home.
  • Business dinners & entertainment costs (up to 50%, and you must specify purpose of the dinner and what clients were in attendance)
  • If you have a home office which takes up 10% of your home and is used primarily for you business, you can deduct 10% of your electricity & utility bills.
  • Books, Magazines, and Journals pertaining to your business.
  • Education/training courses relevant to your buisiness.
  • Liscensing & dues paid to states, your chamber of commerce, etc.
  • Gasoline & vehicle maintenance, if you use your vehicle for your business.
  • Business trip costs.
  • Business gifts up to $25 per client.
  • Office space rent
  • Insurance for business, health insurance premiums, and auto insurance (for business owners who use their car/truck as a primary component to their business)

If you are not self-employed but your employer requires that you own a cell phone, PDA, or a home computer for you job, you may also be able to deduct the costs of these items, as well as home office expenses if you are required to take work home with you. You can also deduct costs for tools, work uniforms (not suitable for daily wear) and other job expenses that are not compensated by your employment

Additionally, if you have been unemployed and actively seeking employment, you may be eligible for deductions.

  • Costs to prepare resumes and portfolios
  • Newspapers & other publications that you purchase to read employment ads
  • Costs to advertise your services in the newspaper
  • Long distance calls to prospective employers
  • Travel costs to go for an interview that is out of your area.
  • Fees paid to employment agencies







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3 Comments:

  • At March 27, 2008 at 12:19 PM , Blogger Laura said...

    I am finally stopping by and thanks for coming by my blog.

    I love your tips. I use turbo tax, while not cheap, it saves me from having to use a tax preparer or taking longer on taxes than I like. The program is great for catching deductions and expenses related to business.

     
  • At October 3, 2008 at 2:07 PM , Blogger Meredith said...

    I like this article, and I'll remember it since I plan on running my own business soon. I can definitely use all the advice I can get! Lately I've been thinking about buying a business (maybe a franchise? home-based? I don't know) instead of starting one from scratch. Any suggestions? Advice? Thanks so much.

     
  • At October 9, 2008 at 10:22 AM , Blogger Rebecca Smeyer said...

    @Meredith -- There are plenty of places that you can check out for help and advice. If you're seriously considering to buy a business, then there are sites like BizTrader.com, which is like this online global marketplace where you can buy and sell a business. You can also use it to find a lender or broker, or invest in a business. If anything, it'd be a good way to know what's available in your area.

    That being said, the same goes with small business groups in your area. They can be very helpful, especially with knowing the ins and outs of your area.

    Good luck!

     

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