Being self-employed comes with a great deal of freedom and flexibility, but it also means you have a larger tax obligation than the average employee. Fortunately, a number of tax deductions are available to those who work for themselves. Knowing what you’re eligible to claim on your tax return will minimize what you owe the IRS. Here are some of the top tax breaks to explore. 

3 Self-Employment Tax Deductions You Don’t Want to Overlook

1. Home Office 

If you’ve designated a portion of your residence as your principal place of business, you may be able to claim the home office deduction on your tax return. To qualify, you must have a space that’s regularly and exclusively used to conduct business. Regardless if you’re a tenant or homeowner, you can deduct a percentage of your housing expenses, including mortgage or rent, insurance, utilities, and maintenance specifically associated with the home office area.

2. Business Travel 

Self-employment can involve quite a bit of travel, whether you’re networking with new clients out of town or attending seminars that teach you skills to give your business a boost. As long as you’re engaging in business activity, many of the expenses you incur on your trip will be deductible, including your transportation, accommodations, and meals.

Keep in mind the costs must be reasonable, and you’ll need to hold on to all of your receipts and records that show what you spent. 

3. Car Expenses

Driving your personal vehicle for work-related purposes, such as going to meet or pick up clients, may earn you another deduction on your tax return. Car expenses can be deducted by using the standard mileage rate or actual expenses. The first involves multiplying the number of miles you drove over the year by the standard rate, which is 58 cents per mile for 2019. The other method requires you to add up all expenses, such as insurance, gas, parking fees, vehicle maintenance, and registration payments.

Preparing self-employment tax returns can be challenging, but the team at Tudor Wilson & Associates CPAs, LLC, in Honolulu, HI, is here to help. Backed by more than two decades of experience, they’ll provide you with effective tax strategies to optimize your earnings and reduce your IRS bill. Call (808) 592-2000 to set up an appointment, or visit their website to learn more about their tax preparation services.