![]() ![]() Do you have any subscriptions relevant to your industry?.Did you buy books or relevant periodicals?.Did you spend money on productivity software and apps?.Do you have an office or even a desk area? (You can deduct the costs related to any square footage in your home dedicated exclusively to work.).Did you spend money on office supplies, such as pens, paper and other essentials?.Did you spend money on office equipment, such as a computer or a phone?.Did you buy business cards or any other advertising materials?.That reduction notwithstanding, go over your budget for the year with a fine-tooth comb. For example, if you buy a new laptop, you need to estimate how much time you spend on it for work and how much for personal use, then deduct the cost of the device accordingly. When you split costs between work and personal use you must divide your deduction appropriately. For example, you can often deduct office supplies, computer equipment or even travel and dining expenses depending on the nature of your work. (They are filed on a separate form.) As a contractor, they can also apply to a wide scope of expenses and activities. This includes attorney’s fees.īusiness costs allow you to itemize tax deductions even if you take the standard deduction. Be sure to note the exact date that the process began and then divide expenses between the costs to get an office up and running (utilities, creating a website, advertising and renting an office space) and the cost of incorporation or otherwise being legally organized in your state and locality. For example, if you earned $75,000 in freelance income during the year and spent $20,000 on relevant expenses, you’ll only owe taxes on $55,000.ĭon’t forget to track your startup costs, which the IRS deems intangible assets and which must be amortized over several years. Like any other tax deduction, you calculate your expenses and reduce your total taxable income by that amount. This means that you can deduct any and all legitimate business expenses from your taxable earnings. Deduct Your Business CostsĪs a contractor you are, for tax purposes, running a one-person business. If this is how you earn a living or just some money on the side, here are some tips. Since taxes tend to start out pretty high for contractors they try hard to cut that bill. ![]()
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