Business expenses that are ordinary and necessary for your work can generally be deducted, lowering both income tax and self-employment tax. Records are essential.
Often deductible
- Equipment, software and supplies
- A home office used regularly and exclusively for business (there's a simplified method of $5 per square foot, up to 300 square feet)
- Business use of your car, using actual costs or the IRS standard mileage rate set each year
- The business part of your phone and internet
- Professional fees, training and memberships
- Self-employed health insurance premiums, if you qualify
- Retirement contributions to self-employed plans
Keep it honest
Personal expenses aren't deductible, and mixed-use costs need a reasonable business share. When in doubt, ask a tax professional.
General information, not tax advice. Pocket Change Pros isn't paid by any bank, software company or tax service.