As you probably already realize, the end of the year is right around the corner. Tax time will be here again very soon. If you’re not careful, you’ll find yourself swamped with taxes. However, there is still plenty of time to take steps to lower the amount of taxes you owe this year. As a self-employed individual, there are numerous tax deductions that you can take full advantage of. By acting now, you could potentially cut the amount of taxes you owe in half. Below, you will learn how to do just that.
Donate To Charity
First and foremost, you should know that pretty much everyone has the opportunity to make tax deductible donations and it is definitely a good idea to do so, before the year ends. There are tons of excellent charities out there and the mass majority of them offer tax deductible donations. Most donations to religious groups are deductible as well. Before handing over your money, read the fine print to ensure that the organization is tax deductible. This can help shed a good amount from the taxes that you owe.
Another thing to remember is that your healthcare expenses may very well be tax deductible. However, there is a certain threshold that you must hit, before you’ll be able to claim these expenses on your taxes. The amount that you need to spend on healthcare depends on your earnings for the year. Nevertheless, most people will be able to spend enough on health-related expenses to make it. If you do, you should make sure to deduct these expenses for your annual taxes. Remember that tax relief is available for self-employed Americans!
There is a pretty good chance that you have a home office. If so, you will definitely want to use it on your tax return. With the home office deduction, you can knock a pretty good amount of off your taxes right from the get go. Just make sure that you remain as honest and truthful as possible, because over inflated home office numbers could make you a prime target for an audit. With the home office deduction, you can deduct items you’ve purchased for the office. This will include computers, laptops, printers, and even supplies. You can also deduct repair and maintenance costs.
Pretty much everyone and anyone needs a good retirement plan. An IRA will prove to be your best choice. If you’re going to be self-employed, you should open up an IRA for numerous reasons. The retirement money will definitely help in the future. At the same time, you’ll be able to claim the IRA deposits on your annual tax returns. An IRA or 401k will definitely do the trick. As a self-employed individual, you’ll normally be able to contribute at least $18,000 to your retirement account as well as an additional 25% of your net income.
The good news is that these deposits will be deductible. With a retirement account, you’ll be able to prepare for the future, while also lowing your taxes for the current year. Again, everyone should open a retirement account for these benefits.