What are some self-employed tax deductions?
You are considered self-employed by the IRS if you: are an independent contractor, you are a sole proprietor carrying on a trade or business, or you are a member of a partnership.
Self-employed individuals are allowed a variety of tax deductions by the IRS. These expenses are known as operating costs and are a necessary part of your business enterprise. These expenses are reported on Schedule C, which is filed along with your 1040 tax return.
Operating costs you can deduct as a self-employed individual include: advertising, licenses and permits, business use of your vehicle, materials, office supplies, insurance premiums on business assets, utilities, business debt interest, equipment repairs and maintenance, travel, plus meal and entertainment expenses.
Also, you can be considered self-employed even though you have a full-time job working for someone else. Just be sure you maintain proper records proving your profit motive and valid deductions.
As a self-employed individual, the IRS states that you need to file a tax return when your gross income is at least the amount that meets the standard filing requirements. These standard filing requirements are based on your age and filing status (single, married, etc.). For instance, for the tax year 2006, a single under age 65 would have to make more than a gross income amount of $8,450. Check with your IRS tax tables for your individual figure.
Self employed individuals need to file Schedule SE (self employment tax) for any net earnings from self-employment over $600. Self-employment tax includes the payment of Medicare and social security. Instead of having your employer pay their portion of these taxes for you, as a self-employed person, you are responsible for the entire share.
For a complete list of allowable deductions for self-employed individuals, refer to IRS Publication 334 – Tax Guide for Small Business.
Tax Tip: Self employed taxpayers may deduct half of the amount they pay for self-employed tax. Use Form SE to calculate your self-employment tax.
Taxes Frequently Asked Questions
What are online tax services like?
Who are the top on-line tax services?
What if I am late filing a tax return?
Who will be e-filing in 2006?
Can mid size and large companies e-file?
Can Charities and Non-Profit Organizations file electronically?
What is the advantage of using the IRA e-file Application system?
What is the quickest way to get a tax refund?
Can self-employed taxpayers use the IRS e-file?
What if I want to know what the status of my refund is?
What do I do if there was an error on a ďjust in timeĒ e-file?
When can credit card payments be made for this years tax returns?
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When hiring a personal planner, what should I consider?
Can you tell me about estimated taxes?
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Is there a checklist for preparing my income tax?
Is there any way I can file my taxes for free?
What if I need additional time to file your tax return?
Can I deduct anything from a house closing on my taxes?
Can I deduct sales tax on my returns?
Where can I get federal tax forms?
Where can I get state tax forms?
Can I order or download tax forms from the IRS?
How do I know what federal tax form to use?
Can I use IRS Form 1040EZ to file my taxes?
Can I use IRS Form 1040A to file my taxes?
Should I use IRS Form 1040 to file my taxes?
Where do I send my tax forms once Iím done preparing them?
What is 1040 Central?
Is it true that the tax filing deadline is different this year?
What is Telefile?
What is e-File?
Is there an advantage to using the IRS e-file option?
What is Free File?
Where can I get help preparing my taxes?
Is the IRS offering hurricane assistance?
What if I canít file my tax return on time?
What electronic payment options does the IRS offer?
How do I know if I need to file a tax return?
What is the Taxpayer Advocate Service?
Am I eligible to get help from the IRS Taxpayer Advocate Service?
How do I contact the IRS?
When should I receive tax documents from employers and others?
What tax documents will I receive from employers and others?
What should I do if I havenít received all my 2005 tax documents?
What personal records will I need to complete my 2005 taxes?
Are there still things I can do to lower my 2005 taxes?
Should I open a dependent care flexible spending account?
Should I open a medical expense flexible spending account?
Should I open a health savings account?
What is a SEP IRA?
Who can establish a SEP IRA?
Can I have both a SEP IRA and other retirement accounts through my employer?
Should I increase my 401(k) or 403(b) contributions?
What are the retirement account catch-up contribution limits for 2005?
What steps can I take now to lower my 2006 taxes?
Should I hire a financial planner?
How do I know if I should itemize on my 2005 tax return?
Does my filing status affect my deductions?
What are the rules on deducting charitable cash donations vs. donated goods?
What types of vehicles can be claimed as a charitable donation?
What is the 2005 mileage rate for deduction?
What is the standard deduction for singles?
What is the standard deduction for married couples?
Can I deduct moving expenses?
Can I deduct contributions to my health savings account?
Can I deduct any or all of the cost of the hybrid car I purchased in 2005?
Can I deduct state income taxes I paid in 2005?
Can I deduct state sales taxes I paid in 2005?
What is the deadline to make a deductible contribution to my IRA?
Is there a limit on the amount I can deduct for IRA contributions?
Are all medical expenses deductible?
Can I deduct home-related expenses?
Is there a limit on the amount of mortgage interest I can deduct?
Can I deduct the interest I paid in 2005 on my student loans?
What type of taxes and fees are not deductible?
Where can I find a complete list of qualified deductible items?
Whatís the difference between tax software and financial planning software?
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Should I consider using tax software to prepare my taxes?
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Is there a cost to e-file my return?
Does tax software help you plan your taxes?
Should I use a tax preparer instead of tax software?
How do I choose a tax preparer?
Can I get a tax deduction for donating my car?
What are some self-employed tax deductions?
What about mileage rates?
Can I deduct any taxes I have paid?
What are some miscellaneous tax deductions?
What are some rental property tax deductions?
Can I donate used clothing?
What are some medical expenses I can deduct?
Can I deduct my home office?
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What is an amended return?
Do I need to file a tax return?
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What are the deadlines for filing 2006 income taxes?
What are personal tax credits?
What are the federal income tax rates?
Do I need to file a state income tax return?
What is an exemption?
What is my filing status?
Where do I mail my IRS 2006 tax return?
What are IRS Publications?
What does the IRS website contain?
How do I obtain IRS tax forms?
What is the IRS Code?
I need an extension. What do I do?
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What is Teletax?
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What is new for 2006?
What is an Installment Payment Agreement?
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What is tax day?
What is barter income?
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What is the tax filing process?
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What are some reasons for delaying processing on my tax return?
Can I split my income tax refund?
What about state tax returns?
What is a tax refund calculator?
What order do my attachments need to be in?
What is a tax return status?
What is the difference between a tax form and a tax return?
How can I find out when I'll get my income tax refund?
What is business tax software?
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Do I need a tax planner?
What is estate and gift tax planning?
How do I estimate my taxes?
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What are some business tax planning tips?
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What is a Tax Planning Guide?
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What form is used for change of address?
What is Form 1099?
What are some IRS forms?
What are some IRS tax forms?
What is a EIN?
What are some payroll tax forms?
What are some employee tax forms?
What is an IRS Tax Form Instruction?
What is a Form W-9?
What are some benefits of efiling?
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How do I prepare for efiling?
How do I get my tax refunds with efile?