There are a host of tax deductions available to self-employed individuals that can generate real savings when filing your tax return. As you prepare to file your 2022 taxes, here are a few deductions you should be mindful of:
- Home office expenses: If you’re using an area of your home regularly and solely for business, you may be able to deduct expenses for a home office from your taxable business income.
- Office supplies: Hang on to those receipts for pens, paper and printer ink as you may be eligible to deduct the total cost of your office supplies.
- Social Security: Remember that if you’re self-employed, you’ll be paying more Social Security taxes than if you were on the payroll of a company. However, you can deduct half of these taxes on your return.
- Vehicle expenses: If you use your vehicle for business, you can deduct either the actual expenses or the standard mileage rate, based on the business use of the vehicle. For the first half of 2022, the standard mileage rate is 58.5 cents per mile, and it increased to 62.5 cents per mile for the second half of the year.
- Section 179: This part of the tax code allows profitable business owners the opportunity to deduct up to the full cost of qualifying capital assets — like furniture, equipment and technology — immediately rather than depreciating them throughout their use. Any unused deductions can be carried forward and put toward next year’s tax return.
- Food and beverages: The stimulus bill passed in December 2020 changed the deduction for meals, allowing businesses to deduct 100 percent of their qualifying food and beverage expenses if purchased from a restaurant in 2022.
Curious about what deductions you might be eligible for on your 2022 tax return? Padgett’s talented network of CPAs, EAs and tax professionals near you can help navigate the confusing world of tax planning and filing. Find an office near you today!