Tax Tips for the Self-Employed, or Those Who Have a Side Gig
Tax preparer Jackson Hewitt is sharing tax advise for self-employed workers, or those who have a side gig. If this describes you, there are eight deductions you really need to know about.
One of the most important benefits for the self-employed is the new Qualified Business Income (QBI) deduction. Self-employed workers and small business owners might qualify for a 20% deduction of eligible business income before taxes.
In addition to the QBI deduction, Jackson Hewitt is reminding taxpayers about seven more deductions available to gig-economy workers, freelancers, contractors, the self-employed, small business owners, and entrepreneurs. Depending on their profession and whether they qualify for these deductions, these taxpayers may be able to deduct:
The expenses associated with a home office as well as equipment and supplies. Self-employed workers, as well as those who operate a farm, are the only taxpayers allowed to claim the home office deduction.
The IRS describes an office-in-home as an area separated from the living part of the home, when used exclusively for business purposes, such as meeting with clients, maintaining books, or conducting other business-related needs.
The area must be part a of your home used solely for conducting business, such as a spare room or study. This means that sitting at your kitchen table drafting emails or walking the dog during a conference call does not qualify as a home office in the eyes of the IRS.
Maintenance and repairs for vehicle upkeep and expenses, including gas and oil, registration fees, insurance, parking fees and tolls, and depreciation (if the vehicle is owned), or leasing costs.
These may include the fees paid to a cab company for using its cars, or rental fees for a truck driver’s trailer. Taxpayers should keep a log of all vehicle expenses (this includes business and personal), miles that were driven for business, and total mileage for the year, to determine the business portion of the expenses.
Business related travel expenses including transportation, lodging, and incidental expenses such as laundry, phones, maid service, and others.
State and local government licensing and regulatory fees as well as liability insurance premiums.
Union and trade association dues as well as subscriptions to trade publications.
Continuing education for the taxpayer and any employees.
Self- employed taxpayers can deduct one-half of their self-employment (SE) taxes and all of their qualified health insurance costs directly on Form 1040 Schedule 1 and Form 1040/ 1040-SR.
For more tax tips, watch the latest video in the Jackson Hewitt YouTube series “Tax File Minute: Answers from a Tax Insider,” where Mark Steber, covers the top issues self-employed taxpayers need to know about their taxes.
Find out more at www.jacksonhewitt.com/
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