Most businesses have two types of supplies. There are the office supplies such as pens, pencils, note pads, calendars, etc. and the work supplies that are specific to a job. A painter would have supplies such as paintbrushes, cleaner, tape, etc.
Keep track of your expenses for each job and for your office supplies. This will help you lower your income taxes and Self-Employment (SE) taxes when it comes time to do your tax return.
2. Vehicle maintenance and repairs
If you use your vehicle for your self-employed work, you may be able to deduct maintenance and repairs for vehicle upkeep and expenses—this may include expenses such as oil, registration fees, insurance, parking fees, tolls, and depreciation (if you own the car or truck), or leasing costs.
These deductible business expenses for taxes may include fees paid to a cab company for using its cars, or rental fees for a truck driver's trailer. Be sure to keep a log of all job-related vehicle expenses, including miles driven for business and your total mileage for the year.
3. Travel expenses
If you travel for work, you may be able to deduct travel expenses. This can include transportation and lodging, along with incidental expenses such as laundry, phones, maid service, and other expenses.
4. Special work clothing
For self-employed workers who require special work clothing, you may be able to deduct your clothing’s cost and maintenance. To qualify as a self-employed tax write-off, the clothing must be required for work and not suitable for everyday use. For example, qualifying clothing may include safety shoes for a building contractor.
5. State and local government licensing fees
Do you need to obtain licensing in order to perform your work? What about insurance? If you’re self-employed, you may be able to deduct state and local government licensing and regulatory fees, as well as liability insurance premiums.
6. Union and trade association dues
If you belong to professional organizations, you may be able to deduct your association fees for those organizations. Subscription fees for trade publications may also qualify as self-employment deductions.
7. Home office expenses
In order to be able to deduct home office costs, your space must be dedicated to work. For example, if you set up your laptop and work at the kitchen table where your family also eats dinner, that’s not deductible. A room that’s designated solely for your work may be eligible for a self-employment tax deduction, though.
Within your home office, you may be able to deduct expenses such as the business percentage of electricity, mortgage interest, equipment, real estate taxes and home maintenance. You’ll need to know how big the space is and how that compares to your whole home in order to calculate an accurate deduction.
8. Continuing education
Expenses associated with continuing education may be eligible for tax deductions. If you run a business, continuing education deductions may count for both yourself and any work-related education that you cover for your employees.
Other potential self-employment tax deductions
In addition to the common self-employment deductions listed above, you may also be able to deduct the following business expenses, if applicable:
- Advertising, branding, marketing, and promotional items
- Bank, credit card, and digital payment processor fees
- Business administrative expenses, such as LLC fees, business software, postage, and mail forwarding service
- Business gifts (limited to no more than $25 per recipient each year)
- Business insurance
- Business meals, up to 50% of meal cost
- Business real estate renting or leasing, including coworking space and office building rentals
- Employee wages and payroll
- Health insurance premiums paid for employees
- Interest paid on lines of credit, credit cards, and business loans
- Labor by subcontractors
- Professional services such as accounting and legal services
- Supplies used in providing services or running your business
What paperwork do you need for self-employment deductions?
When you file your taxes as someone who’s self-employed, you’ll need the following paperwork in order to obtain the full value from your potential tax deductions. Keep these records throughout the year to reduce your stress come tax time.
- Accounting documents
- Allowances and returns
- Bank and credit card statements
- Checking and savings account interest
- Employee payments
- Gross receipts
- Inventory costs
- Partnership agreements, if applicable
- Payroll paperwork
- Previous year’s business tax return, if applicable
- Professional fees and contractor expenses
- Receipts for advertising and marketing
- Receipts for gifts, transportation and travel
- Receipts for equipment, office supplies and phone(s)
- Receipts for home office or office rental and expenses
- Sales records