Discover Your Business Tax Write-offs

Taxes are an essential part of living in the United States. It is unfortunate, but it’s a necessary evil, and every citizen has to pay their fair share. One thing that can help you lower your taxes is by keeping good records to claim them on your taxes during the next tax season.

1. What is a write-off

Tax deductions are ways to reduce the amount of income you have to pay taxes on. A write-off refers to any expense deducted from your taxable income, such as paying for advertising expenses or business travel costs. Most businesses will be eligible for deductions in most categories. Still, some may only qualify for one or two types of deductions. This article will explore what kinds of expenses may be written off and how these tax breaks could help save money on your annual tax bill.

2. Tax deductions you may qualify for

Do you know how to claim your business expenses?

As a freelancer or independent contractor, it is your responsibility to take care of all the necessary paperwork. This includes filling out tax forms and claiming any deductions that apply to you. Of course, this can be overwhelming when there are so many different deductions available and not knowing which ones are applicable for your situation.

There are some common deductions that many self-employed people qualify for, including:  

• home office deduction if the space used as an office is separate from living quarters (i.e., a dedicated room in the house) 
• vehicle expense deduction if you use a car solely for work purposes (including fuel, insurance, etc.) 
• Business meal deduction, but know what lines not to cross.

3. Common tax deductions 

Did you know that there are several different tax deductions available to independent contractors, freelancers, and consultants? There is some overlap between the different types of professionals. Still, many may be unaware that they can claim various deductions. When it comes to filing taxes as an independent contractor or freelancer, it’s essential to make sure you have all your paperwork in order so you don’t miss any deductions.

4. How to find out if you qualify for any other deductions

Suppose you’re an independent contractor, freelancer, or consultant and have a home office. In that case, there are deductions that you may qualify for. With the new tax laws in place, it’s more important than ever to make sure that you know what deductions you can take advantage of. Figuring out whether you qualify for any other deductions can be a daunting task. But, equipped with the right tools and information, it won’t be hard to determine if you are eligible for any other deductions.

5. Examples of some common write-offs and how they work 

As a freelancer, you can use write-offs as tax deductions to help reduce the amount of taxes owed. Many different types of write-offs may apply to your situation, and it is essential to know what they are. Keeper Tax is an accounting software to track and record tax deductions. It’s a live bookkeeper paired with Artificial Intelligence to record your expenses and help your tax planning. Download this from your mobile app store to receive text messages. The Keeper Tax app has a list of common write-offs with categories that they automatically record for you. Some examples include:

• Business expenses – these are costs incurred as part of running your business like office supplies, software, classes, or seminars taken related to your work, mileage driven for business purposes. 
• Car expenses – these are car maintenance costs if you use your vehicle for work. 
• Deductions from pass-through entities are when you get income from an entity such as a partnership or a single LLC.

Do you know the difference between a deduction and an exclusion?

Are you wondering if your small business can take advantage of any write-offs, or are you looking for some more information on which deductions to look out for?

If so, this blog post is perfect for you. It will cover common write-offs that apply to many independent contractors and freelancers and provide examples of how these deductions work.

6. The importance of keeping good records so that you can get more tax deductions next year.

Many freelancers, consultants, and independent contractors are not aware of the importance of keeping good records. As a result, they may be missing out on substantial tax deductions that could make them more profitable in the long run.

To illustrate this point, let’s take an example: 

Lola is a freelance social media consultant with two clients – Company A and Company B. In January 2017, and she invoiced both companies for $5,000 each ($10,000 total). The only problem? She doesn’t have any other supporting documentation to back up her claims!

What happens when Lola files her tax return in April? Well…Lola will likely get audited by the IRS or state tax authorities because she can’t prove her claim. Keeping good records is one of the most important accounting solutions to meet your tax filing needs. 

As a freelancer, you can use write-offs as tax deductions to help reduce the amount of taxes owed. Many different types of write-offs may apply to your situation, and you must know what they are. Keeper Tax is an accounting software designed for live bookkeeping paired with Artificial Intelligence. It’s great at tracking expenses and helping plan ahead on federal income tax returns based on calculations in real-time. Tracking and recording your expenses is easy once you connect your bank card. Furthermore, accountants appreciate the organized spreadsheet available to you once you export your data. That means faster returns for you.

Summary

Keeping good records is key to understanding your deductions and qualifying for more write-offs. You can use a tool like QuickBooks Self-Employed or TurboTax Live (for tax advice) to help you keep track of all the business expenses that come with running a small company, but that includes you doing some footwork. Use Keeper Tax, so you don’t forget anything when it comes time to file your 1099 next year.