Education and Membership Fees
For the professional needs of the business, the purchase expenses of books or periodicals, tuition fees, membership or union membership fees, can be included in the deduction. When you file the tax return, you will need to make sure you have the receipts and documents that can serve as evidence that the expenses and fees are relevant to your business.
Retirement Savings
In order to meet the retirement savings needs of self-employed taxpayers, the International Revenue Service (IRS) offers a generous deduction. The most common is the Simplified Employee Pension (SEP) for self-employed taxpayers and small businesses. SEP allows a deduction of 25% of the self-employed annual income, up to USD53,000.
Home Office Expenses
Self-employed taxpayers, if you have an office at home, do not forget that you can declare many deductions, such as utilities, housing taxes, housing maintenance fees, etc.
It is important to note that the deductible expenses must depend on the proportion of the area of the home office to the area of the self-employed taxpayer's house. For example, for a 2,000-square-foot house with a home office area of 200 square feet, the proportion of the deductible expenses should be 10%.
To enjoy this deduction, the home office must be an independent space, such as a dedicated office room, rather than the corner of the living room.
Fees of Tax and Financial Services
Self-employed taxpayers, if you have a tax law or financial problem, and you must consult a professional from a third party, such as an accountant, do not worry about the cost of the service charged by the professional, as these fees can be deducted.
In addition to the three items of expenses mentioned earlier, there are education and membership fees, SEP retirement savings, home office expenses, and fees of tax and financial services that can be used to declare deductions.
In principle, self-employed taxpayers can accumulate one social security credit as long as the net income reaches USD1,300 (2017). The annual maximum is four credits. A total accumulation of 40 credits will be able to receive social security benefits after retirement. Self-employed taxpayers who wish to accumulate social security credits can pay some attention to the amount of deductible expenses and control the income within a certain range.
Each taxpayer's financial situation and needs are not the same. There are naturally differences in the way the tax return is filed. If you have tax return filing needs, we recommend that you consult with professional accountants specialized in US tax to seek more accurate, more tailor-made professional advice.
