It’s important to make sure that you don’t miss any tax deductions that are available for the self-employed. Make sure you review these key tax breaks.
Do you have a home office?
If so, you may able to claim the home office deduction. You must meet certain requirements though. Specifically, the office must be allocated to the portion of the home that you regularly and exclusively use for your business (reference: IRS Publication 587). Generally, you can deduct the business portion of these expenses: real-estate taxes, qualified mortgage-insurance premiums, deductible mortgage interest, rent, casualty loss, utilities, insurance, depreciation, security systems, and repairs. You can also deduct expenses associated with a separate free-standing structure that you use exclusively and regularly for business (IRC Section 208A(c)(1) & IRS Publication 587).
It’s important to note that there is also a new method for the home office deduction. It is important to note though that businesses will only be able to use this option if their home office expenses does not exceed $1,500 or 300 square feet. In addition, small businesses that opt to use this method won’t be able to claim any depreciation expense as an itemized deduction, which is allowed under the regular method. (more…)