It's estimated that one out of every 10 workers in the United States is an independent contractor.
Flexible hours, the ability to pursue what really makes you happy, and more time with your family and loved ones are just some of the benefits independent contractors enjoy.
But there's one time of year that strikes fear into the hearts of indie contractors -- tax time.
Before you end up paying too much, make sure you know what you can write off. Here are five valuable tax deductions for independent contractors you'll want to know about.
1. Your Home Office
Working from home is great. You get all of the productivity of the office (well, mostly, but that's a different story) with all of the comforts of home. There isn't even any traffic to contend with!
And it gets better -- your home office falls under contractor expenses, so you can include it in your 1099. Your exact deduction will depend upon your workspace's square footage.
Be careful, though, there's a pretty big prerequisite for writing off your home office. You can only write off space exclusively used to conduct business.
2. Internet Access
It's almost impossible to conduct any sort of business without the use of the Internet these days. As you may have guessed, this means that, yes, your Internet access falls under contractor expenses, as well.
Claiming 100% of your Internet bill isn't a great idea. A good tip is to guess how long you spend on the Internet for work, then take a chunk out from your bill accordingly.
It's rarely precise and it's a bit of a guessing game, so don't hesitate to ask a tax professional if you're stumped.
3. Your Vehicle
When writing off your vehicle, you'll have two options: standard mileage and actual expense.
The former is the easiest. Guesstimate how many miles you put on your car for business, then deduct $0.58 per mile. It isn't a lot, but every penny counts.
Actual expense is far trickier and requires some seriously precise bookkeeping. While you can deduct common upkeep like oil changes, repairs, and even gas, you'll need to keep receipts to prove those expenses relate to your business in some way.
4. Advertising Costs
Do you have a dedicated website to promote your services or act as an online portfolio? If so, you can include it under your operating expenses alongside your Internet.
This also goes for any online ads and SEO efforts, too, so don't hesitate to increase your advertising budget next year.
5. Business Supplies
Any supplies you need to operate your business qualify as business supplies. Writers, for instance, can include their new laptop as well as the cost to make paystubs. Online pay stubs can help you keep track of income.
Again, the exact guidelines for what is and isn't a business supply can get a little tricky.
Try and keep it real and only related to work. That means you might not get to deduct the full cost of that laptop, but it's better than nothing.
Don't File Your 1099 Without These Tax Deductions For Independent Contractors
Filing your taxes as an independent contractor is scary enough as it is. Let these tax deductions for independent contractors ease your burden a bit and save you some cash.
Have any questions about your startup's taxes? Get in touch for more tips and advice, or to learn how you can advertise with Lean Startup Life.
