There are many reasons to work for yourself. Being self-employed is a great feeling that often is quite liberating. You become the boss and you get to pursue a wage that you are comfortable with given your lifestyle. While not everyone is cut out for the world of self-employment, those who are will find a lot of flexibility in working for themselves and their clients. At the same time, the obligation to pay taxes does not go away. In fact, many self-employed individuals find that they pay more in taxes than when they were worked for an employer. Take charge of the situation by looking at these six important tax breaks that you will want to consider for 2019.
1. Vehicle Mileage
If you are self-employed, you probably rely on your personal vehicle for many business related trips. You might drive to meet clients, go out to buy supplies, attend trade shows, and so much more. You will want to start keeping track of every trip that you take, no matter how many miles it might be, as you can claim a deduction of 54.5 cents for every mile that you drive for the business. While you do not have to submit a written log with your taxes, you will want to keep one and store it away in the event that you are asked for it later. It will also help you better keep track of just how many miles you did drive for business over the course of a year.
2. Travel For Business
There are many occasions that may have you traveling out of town for your business. You no longer have an employer to pay for this, so you must pay out of your own pocket. Once again, you will want to make sure that save all of your records associated with each trip. You will be able to deduct many of the expenses such as any transportation related costs, taxi fares, lodging, car rentals, and so much more.
3. Premiums for Health Insurance
Another thing that self-employed individuals have to foot the bill for that an employer may have use to pay for is health insurance. Premiums can be quite steep, but it is nonetheless extremely important that you be able to have health insurance for yourself. To help ease the pain of this cost, you can now deduct the premiums from your policy when you go to file your taxes. This also includes your spouse and children if you are responsible for paying for their insurance. Keep in mind that you are only eligible to take advantage of this tax break if you are not able to secure insurance through an employer.
4. Deductions for a Home Office
No matter what type of business you have, you probably have a home office if you are self employed. This can turn into quite the tax deduction when you go to file this year. You will want to figure out the size of the area that you use exclusively for your home office. Remember that it must be a space that is dedicated to the running of your business, so game rooms will not work here. There are actually two ways to claim this tax break. One is based on a certain amount per square foot. Another is based on the expenses in the house calculated out to determine your home office deduction.
5. Credits for Children and Dependents
Self-employed individuals with children have unique needs. Just because you might work at home does not mean you are able to have your young ones around you all the time while you are in the home office. You may need to rely on daycare. While you cannot write off all expenses associated with this, you are able to deduct up to 35 percent up to a certain amount based on the number of children or dependents that you have.
6. Deduction for Self-Employment Tax
You will need to pay self-employment tax. This actually means that you have to cover the full contribution to both social security and Medicare. At the same time, you can deduct 50 percent of those taxes when you go to file your taxes, so that will bring some welcome relief.
There are other tax breaks that you will want to consider as well, but these six are likely the most advantageous for self-employed individuals. It is important to think about your own situation and how each of these tax breaks apply to you. If you have questions about any of these tax breaks and how to maximize them as you are self-employed, it is important that you consult with a tax professional.