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Checklist for Self-Employed Entrepreneurs

Checklist for Self-Employed Entrepreneurs

Uncommon Tax Write-Offs That Most Self-Employed Individuals Miss

  • Your Retirement Contributions
    1. For 2019, 2020, and 2021, the total contributions you make each year to all of your Traditional IRAs and Roth IRAs can’t be more than $6,000 ($7,000 if you’re over the age of 50), or If less, your taxable compensation for the year.
    2. Traditional IRAs are tax-deductible for the year in which they are paid. This is based on the above limits.
    3. Roth IRAs are not tax-deductible. You pay the tax now when the money is deposited into the account so that you don’t pay tax on your savings when it comes time to withdraw during retirement.
  • Insurance Premiums
    1. You are able to take the health and dental insurance premiums you pay as a tax deduction if you are self-employed.
  • Home Office, Equipment, and Supplies Deductions
    1. You are able to take a home office tax deduction if you have an office in your home. This space has to be used exclusively for business.
    2. The following are two options for the deduction:
      1. Simplified Method: This takes the square footage of the space you use for your business a certain allowance per foot (typically $5). This cannot exceed more than 300 square feet.
      2. Regular Method: This takes the percentage of your home expenses that you use for your  business and uses that percent to calculate the portion of utilities, repairs, etc. that can be taken as a deduction.
    3. For more information on home office deductions see our blog post here.
    4. Office supplies like pens and printer paper purchased for business are tax-deductible. Even larger items like office furniture and computers are also eligible to be deducted.
  • Cell Phone/Internet Plans
    1. Business-related cell phone and internet plans are 100% deductible as long as the internet or phone plan is solely used for work. If you work from home or also use these plans for leisure, the percentage of use for business can be deducted but not the entire plan.
  • Continuing Education Expenses
    1. If you are taking classes for the purpose of the business, you are able to deduct these on your tax return.
  • Business Credit Card Interest
    1. Any interest that you pay on a business credit card is tax-deductible in the year that it was paid.
  • Credit Card Convenience Fee
    1. Credit card companies charge a fee to businesses that accept their cards. This fee when paid or incurred by the business can be deducted as a business expense.

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MBE CPAs PPP2 Qualification resource sheet can be downloaded here.