If you are selfemployed and you are filing your
2021 selfemployed income taxes this tax season, in year
2022, you could be throwing away thousands of dollars.
You could be paying thousands more in your
selfemployed income taxes than you actually need to.
I'm going to show you how taxpayers like
you save an average of over $12,000 on
their self employed income taxes, utilizing self employed
tax deductions and write offs to reduce their
taxable income and save thousands of dollars.
First, this video is sponsored by 1-800 Accountant.
1-800 Accountant is the nation's leading
virtual accounting firm for small businesses.
Their goal is to help you save more on
taxes and spend less time and money on accounting
so that you can focus on your business.
Built with a team of experienced CPAs, they have served
over 900 businesses and operate in all 50 States.
With dedicated experts in every industry, 1800
Accounting offers affordable flat rate pricing and
a 30 day money back guarantee.
Let 1800 Accounting help you with your business
taxes, your business, start up payroll and bookkeeping
so that you can focus on your business.
I am not a CPA or a professional tax
prepare, so I want to make sure that you
understand that this information is coming directly from either
the IRS or from 1-800 Accountant.
1-800 Accountant has a fantastic blog with lots
of resources and information on it, so I'm
going to link the articles that I'm referencing
in the description down below.
Tax deductions work by reducing taxable income and
therefore lowering your taxes overall, they essentially exempt
portions of your income from being taxed.
Now, in order to write off your expenses, the
IRS does have a few requirements in order to
make those expenses classify as being qualified.
First, your expenses have to be relatively normal
to your industry and they must clearly be
in support of your business's fundamental operations.
Next, you must be able to provide adequate documentation
of these expenses if you ever should need to
prove that they actually work for your business.
Is the self employment tax deduction.
As a self employed individual, you are subject to
paying selfemployment taxes, which equates to 15.3% that breaks
down to your Medicare and your Social Security.
If you were traditionally employed, then your employer's
payroll would take care of that, but you're
not, so therefore you must pay it.
But the good thing is that you can claim
a deduction on half of that selfemployment tax amount.
Seven point 65% of your self
employed taxes can be deducted.
The next deduction is the one that seems
the most obvious and is your operating costs.
Anything that you need in order to have your
business in operation can be written off as a
tax deduction so you can deduct labor.
Any employee payroll, contractor labor, wages,
bonuses, or commissions are all deductible
next to professional fees.
Next to professional services.
If you hired a lawyer, an accountant, or some
other type of professional to work with, you in
your business, then those fees are tax deductible.
This also applies to fees that you might
pay for something such as a membership or
a subscription, as these are deductible as well.
Next is the home office deduction and this is
a big one, but there are some specifics here.
In order to qualify, you cannot simply work anywhere around your
house in a communal space or a space that you use
for something else and claim it as a home office.
You must have a dedicated space that is
used only for business and is the primary
place where you conduct your business.
Now, if you are eligible for this deduction,
you can then claim a portion of all
of your home related costs as business expenses.
Next is a deduction for depreciation of property.
If you have purchased a large investment in terms
of business property, then you shouldn't necessarily deduct the
cost of the whole investment right away.
What you can do is to deduct
the depreciation of value over time are
deductions related to marketing and advertising.
If your business is spending anything for marketing
or advertising, such as creating business cards, social
media ads, SEO services, influencer marketing, or a
variety of other things that would fall under
this category, then it is deductible.
Next are organizational expenses that you need to
organize and establish and set up that business
is going to count as a deduction.
Next are your internet and phone expenses.
1-800 Accountant States that for a home office or a
personal phone that you also use for business costs, you
can deduct a fraction of the total cost based on
an estimate of your relative business use.
If you have a dedicated phone or internet
service plan that is used only for businesses,
then you can deduct the full cost.
Next are your building costs.
If you rent or lease a space that is dedicated
for your business, then you are able to deduct that.
In addition to just deducting the rent,
you can also deduct anything that is
associated with maintaining or operating that space,
such as utilities, repairs, insurance, etc.
For the next deduction is
business travel and transportation.
As long as your trip is intended entirely for
business purposes, then every expense incurred on that trip
outside of your regular area is tax deductible.
The next tax deduction is vehicle usage.
Even if you own a personal vehicle and you
are utilizing it only partially for business, you can
still deduct those partial expenses on your tax return.
Document your mileage when you use the vehicle
for business purposes and this way you can
claim a deduction based on your specific mileage.
It should be noted that this does not include
travel to and from your office and residence.
Next is professional education.
If you underwent any courses,
any developments, any seminars, etc.
That led to the development of your business or yourself
as a business owner, then those are tax deductible.
Next, you can deduct things such as your
insurances, Your taxes, your licenses and your permits.
These are necessary costs associated with
the operation of your business.
Next are banking costs and credit card processing fees.
These once again run online with
normal operation of a business.
If you are holding money in a bank and
you receive charges for that bank or you're collecting
money and having to pay a fee into that
system, Then it is tax deductible.
Next are meal deductions.
Now, this does not mean that you can deduct your
lunch every day from simply working and needing to eat,
but rather if you are specifically taking your clients out
to a meal or if you're bringing food back into
your business to be consumed by your employees.
Generally meals are 50% deductible, but there are a
few meal related costs that can be 100% deductible.
In order to be 100% deductible, it must
be food or entertainment provided as part of
a party for the entire company at once
or it must be something officially included as
compensation for your employees for whatever purpose.
The last deduction I want to go over
with you today is on retirement contributions.
The amount that you are able to contribute depends
on what type of retirement plan you currently have
set up, but every year you're allowed to contribute
a maximum amount to your retirement plan.
Those contributions are tax deductible.
1800 Accountant recommends that it would be a smart idea
to Max out your deductible retirement contributions before the end
of each year, especially if you are likely to find
yourself in a higher income tax bracket. Why?
Because this allows you to defer paying taxes on that
income until you withdraw that money at a later date.
And lastly, if you have not yet seen my
video about self employed sick leave due to the
pandemic next, I want you to click on that
video to see if you qualify for an up
to $5,000 deduction based on that pandemic related requirements.
Okay you guys, I hope that was helpful.
Please remember to click the link in the
video description down below in order to access
1-800 Accountant's wide variety of services.