The arrival of tax season is about to knock on your door, every self-employed individual is faced with a unique set of challenges. However, the self-employed individuals have an upper hand over the traditional employees of a business in the sense that unlike the normal employees, these individuals do not have any pending taxes from their paychecks. This will help them to ease the tax burden and in order to cover up their expenses or overheads, they can use tax deductions. Nevertheless, it should be noted that the situations of every self-employed individual is entirely different from one another and in this respect, the claiming self-employed taxes is situation specific for each individual.
What are the claiming self-employed expenses that are deductible?
Deductible expenses are considered as commonplace and essential for the smooth running of the business. Every expense can fall under this category; from the marketing and promotion expense to every petty one. However, the self-employed individual should specifically keep in mind that in order for the expense to be tax deductible is should be related to business only and not a personal one.
Which individuals fall in to category of claiming self-employed expenses?
Any individual who is the master of his own private setup which can either newly organized or already established come under the category of self-employed individuals. So all ridesharing drivers specifically the Uber drivers who ask for large traveling distance deductions, freelancers who make take refuge in a home office in order to circumvent the corporate formalities. Furthermore, the tax deductions benefits can be enjoyed by all the other self-employed individuals such as designers, photographers, accountant, professional consultants, tax preparers, construction personnel who work within the confines of their own individualistic setup and list all their expenses as business related.
Although some of the tax deductions may not be related to your professional or the business setup, you will be amazed to realize that a certain amount of expense do fall in the category of tax deductions. Once you are prepared to file for the annual tax return, the self-employed taxpayer will report majority of their business related expenses in Schedule C or form 1040. Furthermore, if these individuals are seen claiming self-employed expense that are less than $5000, they have the benefit of utilizing the Schedule C-EZ form. Both of these forms that are the form 1040 or Schedule C and Schedule C-EZ are due to be filed on the 15th of April along with the yearly tax return.
Now here is the listing of all those common place expenses that are claimed by self-employed individuals and are subjected to tax deductions. And these expenses are filed through Schedule C or 1040 form for the annual tax return.
Expenses that arise from advertisements
These expenses include the materials needed for marketing such as flyers, banners, events, trade shows, exclusive profile-raiser ads and signage. In addition to the material cost, the cost of producing then such as designer or organization costs are also included.
Expenses that arise from the business Indemnification or Insurance
The insurance cost that is envisioned to protect the business from an unforeseen circumstances such as floods, fire, theft, unprofessional conduct, general legal responsibility and worker’s reimbursement.
Expenses that arise from transport of the business
Keep in mind that those car related expenses that are centered for business activity would be considered as a business expense and hence subjected to tax deductions. In this respect as the expense such as gas, repair, service, maintenance and insurance are included. Even if the self-employed individual do not own a private car and uses public transit for business purposes, the transportation cost is listed in as a business expense.
Expenses that arise from the depreciation of business assets
Those assets that are used for business only such as technical equipment, computer, office related tools and furnishings that reflect the claiming self-employed expense are subjected to tax deductions. However, it is important to note that the Internal Revenue Service expects the self-employed individuals to fill the form 4562 in order to make claims for tax deductions on these expenses.
So, these are some of the claiming self-employed expenses that are subjected to tax deductions. The self-employed individuals should specifically note that these expenses should be business related only.
