Your Accounting Firm in Miami On Self-Employed Tax Deductions

Your Accounting Firm in Miami On Self-Employed Tax Deductions

Who Are The Self-Employed?

Accounting firm in MiamiAccording to the Pew Research Center 2015 statistics, 14.6 million people are self-employed in the U.S. which represents 10% of the nation’s 146 million workers. These self-employed workers hire about 29.4 million other workers, resulting in three in ten U.S. jobs being held by the self-employed in their employees. Your accounting firm in Miami found out men are nearly twice as likely to be self-employed, 12% vs. 7% and also more likely to hire other paid employees.

Self-employed men hire about 28% of the time compared to women who employ others about 16% of the time. According to 2014 data, 81% of those working in agriculture, forestry and fishing were self-employed or hired by someone that’s self-employed. 68% worked in construction. 35% in retail.

These days, thanks to the leaps and bounds made in technology, self-employment is even more popular than ever not to mention accessible and affordable to most. For so many, running a business means having an internet connection or purchasing a few cloud-based software programs. Everyone from even planners to those in the creative arts industry such as designers, writers and photographers, to online retail e-commerce business can be self-employed. Even your accounting firm in Miami has several clients that are operate their own businesses which is why we thought tax deduction for the self-employed would be a great blog topic.

Medicare and Social Security

For the self-employed, decreasing costs and maximizing resources is key to their business’ success. For many, the first years are all about reinvesting profits into the business. So if you operate your own business know that your share is 15.30%.

Home Office Deduction

home office deduction

Whether you own your home or rent it, as long as you use a certain space exclusively for work then that space is part of your self-employed tax deductions. This includes a percentage of your mortgage interest, depreciation, property taxes, utilities, insurance and even maintenance.

Your accounting firm in Miami remind you though that should you be audited, you’ll need to have a diagram of the workspace with measurements to clearly represent your office space. You can calculate your home office deduction by calculating the expenses or just using the standard IRS rate at $5 per square foot.

Phone and Internet

Your accounting firm in Miami remind you that even if you don’t claim your home office deduction, internet and phone can still be part of your self-employed tax deductions. Make sure you deduct only the portion that used for business use. So if you’re using the internet half of the time to conduct business and the other half for personal use such as watching movies, then you should only claim 50%.

Health Insurance, Meals and Entertainment

When it comes to health care and self-employed tax deductions, you can claim it all including health, dental, long-term care and even premiums paid for a spouse or children. For meals, you can only deduct 50% of the cost of the meal. Just keep receipts and make sure they’re not extravagant dining experiences. The same goes for entertaining clients, 50% self-employed tax deduction. Remember, business actually has to take place in order to claim these deductions.

Travel

Business Travel

For the self-employed to be able to deduct travel expenses, the traveling must last longer than a day, you have to sleep or rest somewhere away from the general area of your home. If you need to travel to find new clients, learn a new skill or meet with existing customer, then you can claim your travel expense.

For more information on self-employed tax deductions, call your accounting firm in Miami at 305.868.7620 for help.

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