While it’s undoubtedly true that the government wants its money in full when taxes are due, and tax rates fluctuate, it’s not the unfair situation that it is always portrayed to be. People not only have more tax breaks available than ever, they also have more information than ever on how to take advantage of these breaks. The self-employed Business Owner should gain a healthy understanding of how taxes work, so that they’re able to keep some money in their pocket books during tax season.
The Home Office
One of the most common tax breaks a self-employed person can take advantage of is the home office. If you work from home, you need to shift your train of thought and understand that this is also your place of business. If you are attempting to write off business expenses, make sure you account for your work place. Whether you operate out of an entire room in your home or just a portion of a room, you need to measure the square footage of this office space in relation to your entire building square footage, and write off this portion of your rent or mortgage.
When writing off business travel you have two options; miles or maintenance. You must choose one or the other, but can’t write off both. If you do mileage, you should keep accurate and thorough records of the driving you do, and multiply those miles by your state’s reimbursement rate. If you write off maintenance expenses on your taxes, you’ll need to keep accurate records and receipts for your gas, inspections and car repairs.
You should dig deep when thinking about your line of work and figure out what every day expense you use for work that can provide you some tax relief. For instance, if you happen to cover sports for a local radio station, you might write off that subscription to Sports Illustrated, the sports package on your cable bill and all of the money you spent on ink pens, printer ink, computer expenses and other charges.
Staying abreast of your tax situation will keep you ahead of the game. If you have any questions, contact us.