Income Tax Deductions: A Guide For The Self-Employed

If you are self-employed, have you ever wondered how to reduce your income taxes? Read and find out in this article the income tax deductions that can be written off your tax liabilities!

Several self-employed individuals want to use all income tax deductions that they are qualified for. Whether a self-employed individual makes a profit or loss, here are a few deductions that they might want to be aware of.

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Credit Card Interest

According to Washington, if purchases for a business are made on a credit card, an individual can consider a credit card interest as income tax deductions on the federal tax return. The Internal Revenue Service (IRS) considers eligible business purchases as necessary for business operations. These business purchases may include meals, internet services, cell phones, rent, salaries and wages, utilities, and interest.

Phone Services

The phone services purchased for a business can also be considered as income tax deductions. For instance, if a yearly phone bill is worth $2,000 and 30% of it was used for business, an individual is entitled to deductions worth $600.

Rent Deduction

According to Fontinelle, if an individual pays rent for using a property they do not own, the payment can be considered as income tax deductions. However, if the individual owns a percentage of the building they rent, it cannot be considered as deductions. In general, rent can only be deducted in the year it was paid or incurred. For instance, $36,000 worth of rent expense should be paid for 3 years beginning January 1, 2023. For 2023, only $12,000 can be claimed as deductions. The remaining $24,000 will be deducted in the next 2 years for $12,000 each.

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