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How To Reduce My Taxes Being Self Employed
from:Being self employed creates some special tax challenges. And, often business owners wonder how to reduce my taxes being self employed. They may not be obvious, but there are some ways to reduce your taxes. But, when you’re self employed, it will take some diligence to keep track of the deductions you can take.
If you’re wondering how to reduce my taxes being self employed, one of the first items you should look at is your retirement savings. Saving for retirement helps you reduce your adjusted gross income, which is the amount you pay taxes on. Everyone who is self employed should be contributing to an IRA of some sort. If you’re single, and have no access to a company sponsored 401k, your contributions to an IRA are tax deductible up to $4000, or $5000 if you’ll be 50 years old by year end. If you’re married and your spouse is involved in a company sponsored 401k, then you can contribute up to $4000 or $5000 if you’ll be age 50 by year end, provided that your joint adjusted gross income is less than $156,000. Reducing your adjusted gross income is a great way to save on taxes each year. In addition, you’re saving for retirement, which is important for all of us. And, in an IRA account, you won’t pay taxes on the interest you accumulate until you begin to make withdrawals from your account during retirement.
If you’re still wondering how to reduce my taxes being self employed, take a look at your deductions. The self employed are afforded many deductions for business expenses, and there are some that you may not have thought of. The IRS says that you can deduct any reasonable business expense. For example, if you use a cell phone to do business, you can deduct not only the cost of the phone itself, but also some or all of your monthly bill. If you’re required to wear uniforms that you must pay for yourself, these can be deducted.
There are still other deductions for those wondering how to reduce my taxes being self employed. For example, if you entertain clients as part of doing business, you can deduct 50% of what you spend from your taxes. So, save all those receipts when you take your clients out to dinner, as they are a reasonable business expense. And, if you have employees and you throw an employee event, such as a picnic, these expenses are 100% deductible.
Hopefully these tips have helped you learn how to reduce my taxes being self employed. For more tips on reducing your taxes, talk to your tax advisor.
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