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.
About the author:
Find more about
Tax
Deductions
