Over time, this equipment's value decreases.įor example, if you bought a laptop or a printer two years ago, its value now is lower than when you bought it. Equipment depreciationĪny business owner needs to purchase specific equipment required to perform the work. Record cell phone expenses under Part V (Other Expenses) of your Schedule C. If you use a cell phone for both personal and business use, you can deduct the portion of time you use it for business purposes from your monthly bill. ![]() If you have a dedicated cell phone for business purposes, you can deduct the cost of it. Record legal and professional service expenses on Line 17 of your Schedule C. For example, if you pay someone to help prepare and file your taxes, you can deduct the cost associated with preparing the Schedule C (but not your personal return). If you hire people for professional services, such as tax advisors, lawyers, or accountants, those fees are considered a deductible expense. Legal, accounting, and tax professional services Record contract labor expenses on Line 11 of your Schedule C. If you hire independent contractors yourself, such as a designer to create a brochure or a web developer to build a website, you can claim a deduction on their fees.Īgain, if you pay a contractor more than $600 in a tax year, fill in a Form 1099-NEC. Record commission and fees on Line 10 of your Schedule C. Keep in mind that if you pay a contractor more than $600 within a tax year, you will need to file a Form 1099-NEC. These include services of sales reps or fees charged by marketplace channels and platforms like Amazon, Etsy, or eBay. Commissions and feesĪll commissions paid to non-employees for sales and marketing purposes are tax-deductible. Record advertising expenses on Line 8 of your Schedule C. If you are using services from a PR agency or a freelancer, you can deduct their fees as well. Some of the activities include running Facebook Ads, Google Ads, trade show promotions, as well as printing business cards, flyers, branded swag, or other promotional materials. You can benefit from a tax deduction on reasonable advertising costs, both online and offline. Record utility expenses on Line 25 of your Schedule C. Don't use this for claiming utility expenses for your home office - claim them on the home office expense line instead. Utilities: Power, water, and internet bills can be tax-deductible. Record repair and maintenance expenses on Line 21 of your Schedule C. Don't use this for claiming repair and maintenance expenses for your home office - claim them on the home office expense line instead. Repairs and maintenance: Incidental repairs and maintenance of the office space and equipment you use for work are tax-deductible. Record office supply expenses on Line 18 of your Schedule C. Note that if you use office supplies to make or ship a product, add those costs to Cost of Goods Sold instead. You can only claim expenses for supplies you used up during the year (that means you can't stock up on paper clips on December 31). Office supplies: You can fully deduct costs of office supplies such as pens, paper, sticky notes, and other stationery used to run your business. Record home office expenses on Line 30 of your Schedule C.įurther reading: IRS Publication 587 (2020), Business Use of Your Home Office expenses The maximum tax deduction is $1,500 per year. ![]() Rather than detailing all expenses, you can claim a standard deduction of $5 per square foot of the home office part of your home. Simplified method: If your home office space is under 300 square feet, you can use the IRS's simplified calculation. To claim this deduction, complete IRS Form 8829 (Expenses for Business Use of Your Home) and attach it to your Schedule C. Standard method: You can calculate the home office deduction by determining the percentage of the square footage the office occupies out of your home's total area. Run your costs through both of them and use whatever scenario gives you a higher deduction you can claim. You can choose between two methods of calculating the home office tax write-offs. How to calculate your home office deduction? As this is considered a place of business, you could write off a portion of your mortgage interest, rent, real estate or property taxes, security system, and homeowner's land insurance expenses related to a dedicated space you keep for for business purposes. Independent contractors and many self-employed often work from their home offices. Here are some of the most common tax breaks for contractors: Home office expenses
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