You get this tax-saver every year you have a qualifying home office. If you have a 300-square-foot home office (the maximum size allowed for this method), your deduction is $1,500. However, the IRS has come up with a simplified method that allows taxpayers to deduct $5 for every square foot that qualifies for the deduction. Many work-at-home taxpayers skip this break, either because they don't know about it, are afraid claiming it will trigger an audit, or are put off by the recordkeeping hassle necessary to back up the deduction if challenged. You can also write off part of your rent or, if you own your home, depreciation (a noncash expense that can save you real money on your tax bill). Pass that test and part of your utility bills and insurance costs can be deducted against your business income. The key to the home-office deduction is to use part of your home or apartment regularly and exclusively for your moneymaking endeavor. Whether you're fully self-employed or do some freelancing in addition to your job as an employee, if you work at home the government might subsidize what are generally considered personal expenses. You'll be happy you did when it's time to file your return. With that in mind, now that you're self-employed, check out these eight often missed ways to make the tax laws work for you. But sometimes the hard part is simply making yourself aware of the tax breaks available so that you can claim them on your tax return. That includes help lowering your tax bill. And when you're on your own, you need to take advantage of whatever assistance is available. After all, the success of your business is in your own hands, which can create a lot of extra pressure and anxiety.įortunately, there are some tax deductions and credits available for self-employed people that can help dial down the stress and improve your bottom line.
Self-employment can lead to more money, flexibility, control, or personal satisfaction, but it can also come with new financial headaches you probably didn't have to deal with as an employee. Thanks to the pandemic and the "Great Resignation," more people are leaving their traditional jobs and venturing out on their own.
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