## Why Deductions Matter

Every dollar you deduct reduces your taxable income. For self-employed individuals paying both income tax AND self-employment tax (15.3%), deductions are doubly valuable.

Home Office Deduction

Requirements: - Regular and exclusive use - Principal place of business - OR where you meet clients

Two Methods:

Simplified Method:
$5 per square foot
Maximum 300 sq ft = $1,500

Actual Expense Method:
Calculate home office percentage
Deduct that % of: rent/mortgage, utilities, insurance, repairs

Example: - Home: 1,500 sq ft - Office: 150 sq ft - Percentage: 10% - Annual rent: $18,000 - Deduction: $1,800

Vehicle Expenses

Standard Mileage Rate (2024): 67 cents per mile for business use

OR Actual Expenses: - Gas - Insurance - Repairs and maintenance - Depreciation - Registration - Loan interest

Important: - Track all business miles - Keep a mileage log - Can't switch methods for same vehicle

Phone and Internet

Deductible: - Business-use percentage of cell phone - Home internet if used for work - Dedicated business phone line (100%)

Documentation: - Estimate business vs. personal use - Keep records of usage

Equipment and Supplies

Fully Deductible: - Computers and laptops - Printers and office equipment - Software subscriptions - Office supplies - Tools of your trade

Section 179 Deduction: Deduct full cost of equipment in year purchased (up to limits)

Professional Development

Deductible: - Courses related to your work - Conferences and workshops - Professional books and publications - Certification costs - Online learning subscriptions

Not Deductible: - Education to enter a NEW career

Insurance Premiums

Health Insurance: - Self-employed health insurance deduction - Deduct premiums for yourself, spouse, dependents - Reduces income tax (not SE tax)

Business Insurance: - Professional liability - Business property insurance - Cyber insurance - Errors and omissions

Professional Services

Deductible: - Accounting and bookkeeping - Legal fees (business-related) - Tax preparation (business portion) - Consulting fees - Virtual assistant services

Marketing and Advertising

Deductible: - Website hosting and design - Business cards - Social media advertising - Google/Facebook ads - Print advertising - Trade show costs - Promotional materials

Travel Expenses

Deductible When Traveling for Business: - Airfare - Lodging - 50% of meals - Rental cars - Taxis/rideshares - Baggage fees

Requirements: - Primary purpose must be business - Keep detailed records - Must be away from home overnight

Meals (Business)

50% Deductible: - Client meals - Meals while traveling - Team meals (with business purpose)

100% Deductible (some cases): - Office snacks for employees - Company-wide events

Retirement Contributions

Options: SEP-IRA: - Up to 25% of net SE income - Max $69,000 (2024)

Solo 401(k):
Employee contribution: $23,000
Employer contribution: Up to 25%
Max $69,000 combined

SIMPLE IRA:
Up to $16,000 (2024)

Other Common Deductions

Bank and Financial: - Business bank fees - Credit card fees - Merchant processing fees - Business loan interest

Licenses and Fees: - Business licenses - Professional dues - Association memberships - Permit fees

Bad Debts: - Unpaid invoices (under certain conditions)

Depreciation: - Long-term assets spread over time - Section 179 for immediate deduction

Often Overlooked Deductions

**Start-up costs** - Up to $5,000 first year
**Home office furniture** - Desk, chair, etc.
**Subscriptions** - Trade publications, tools
**Parking and tolls** - Business-related
**Postage and shipping** - Business mail
**Business gifts** - Up to $25 per person
**Continuing education** - Current field

Record Keeping Requirements

Keep Documentation For: - All expenses claimed - Receipts over $75 - Mileage logs - Home office measurements - Client meeting records

Retention Period: - Minimum 3 years - Recommended 7 years

Deductions to Be Careful With

High Audit Risk: - Large vehicle deductions - 100% home office claims - Travel to desirable destinations - Hobby losses - Meals without documentation

Best Practice: Document everything and keep business/personal separate.

Track Expenses and Income

Stay organized for maximum deductions:

Create regular pay stubs to track income
Record all expenses as they occur
Keep digital copies of receipts
Prepare for tax time year-round

[Create Your Income Documentation →](/)

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*Tax laws change frequently. Consult a tax professional for current deduction rules and limits.*