5 Financial Moves Self-Employed Workers Can Make Now to Increase Their Tax Deductions
MVG Accounting Services was founded by Erica Gigena in 2004. Our firm is based on the belief that our customers' needs are of the utmost importance. Our Accountant, Erica Gigena, is committed to meeting those needs. As a result, a high percentage of our business is from repeat customers and referrals.
Erica P. Gigena has graduated with an Accounting Degree from California Polytechnic University of Pomona in 2003. She has more than 15 years experience working with small businesses and self-employed individuals meeting their accounting, bookkeeping, tax and business needs. She has become and Enrolled Agent with the IRS to have more client representation with the IRS on tax issues. Also, Erica speaks Spanish fluently for our Spanish speaking clients that feel more comfortable communicating in the language.
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Although many people dream of going into business for themselves, one of the main reasons they don’t is because of all of the economic uncertainty. If you are self-employed and need some ideas on how to increase your tax deductions we can help you with these!!
Better Expense Tracking. Larger enterprises can afford many accountants, in order to keep track of business accounts and stay current on trends in accounting best practices. The equivalent for the freelancer is a good accounting software, such as QuickBooks,® or, depending on their Schedule C, QuickBooks® Self-Employed. We can help you enter everything, or set up integrations with your online bank account or payment software. The self-employed often also forget to include business-related travel expenses, which are 100 percent deductible, and meals/entertainment, which are 50 percent deductible. Bank fees, educational expenses, advertising and interest payments on business credit cards are also under-recognized. For more information, visit the IRS’ Self-Employed Individuals Tax Center.
Home Office Deduction. Self-employed workers normally work at home, but their home office deductions tend to receive a lot of attention from IRS auditors. You don’t want clients to be frightened of an audit, as long as they play it safe. The great news is that this deduction was revised in 2016 to reduce their administrative burden. The best place to learn about these changes to the tax code is the official Home Office Deduction. At minimum, the use of your home address must be your principal place of business, and the room or rooms set aside must be for business-use only. The living room doesn’t count.
Depreciation. If people think about depreciation at all, they will usually tie it in with heavy equipment or real estate. The fact is that all assets can be depreciated, as long as they help generate income and are used for multiple years. Computer equipment is a good example. Read over the Brief Overview of Depreciation on the official U.S. tax code. Depending on how your other finances are going, you might want to depreciate them in full, in the year they went into service.
Health Insurance. In the past, people used to look for jobs just for the good insurance. That’s not necessary anymore. In 2016, health insurance as an industry was in the midst of a major overhaul. You can deduct your health insurance payments, and may also be able to deduct health insurance premiums for the rest of your family and dependents.
Retirement Plans. The future will be here sooner rather than later, so the earlier you start saving for retirement, the greater the impact of compound interest. Freelancers can watch a video about your potential tax deductions for retirement plans at the IRS site. We can help you gather all the information needed on 401(k)s, IRAs, SEPs and other savings plans, and remember that you will save twice: once in the account and a second time when you take it off your income.