You are your own boss. You have been working alone for quite a while, and then why not make the most of what is offered to you.
Self-employment tax deduction is a blessing for those who run their own business or are planning to set up their business. File taxes under Schedule C or Schedule C-EZ and have your social security number for identification. This helps you in getting relief that would have been difficult if you were a mere employee.
Both schedules work differently and a careful understanding is very necessary. Form Schedule C-EZ is used by those whose business expenses are small, who end up the year with a profit, which run the business without any employees, who have no need to claim a home-office deduction and who do not report any depreciation.
Form Schedule C is for business enterprises that bigger and require more handling. The main difference is that under schedule C, you can show a loss.
The following are the tax deductions that you can claim if you are self-employed:
Equipment Expenditure: you use a lot of computer for your own purpose and you can claim deductions. Also on the cabinets. But the actual limit can be sought in the IRS publications.
A percentage of travel, meal and entertainment expenses can be deducted under this facility.
Health Insurance and Social Security Taxes: health premium paid on your and your family's health is deductible but under form 1040.
Self-managed retirement benefits: You can open a Keogh or a Simplified Employee Pension plan. The contribution that you make to either of these plans from your earnings can be subtracted from your adjusted gross income when you file Form 1040.
Home Offices: using a part of your house for book keeping and storing files can be used as a deductible expense.
Well, these are just a few options available to you in terms of saving some money. Consult a well known tax consultant and you can reap better rewards in terms of savings. |
