6. You may be able to take some deductions other people can’t
It can sound like people who are self-employed get the short end of the stick when it comes to taxes but the silver lining can be getting deductions for a home office or other business expenses. For instance, if you have a home office, you may be able to get a deduction for the dedicated space devoted to your business on property taxes paid, utilities, phone bill or internet service.
“So it’s not just for computer equipment and desks. It’s also a portion of those indirect expenses of operating your house that get converted from a nondeductible personal expense to now a deductible business expense,” Williams says.
According to the IRS, there are two basic requirements for your home to qualify as a deduction:
- Regular and exclusive use
- Principal place of your business
See IRS Pub. 587 for more information, and consult a tax advisor regarding your situation.
If you’re claiming a deduction for property taxes and utility bills and all the other expenses, hold on to those receipts in case there’s a question about those deductions.
Finally, keeping a separate account to pay quarterly estimated taxes may make sense to help ensure the money is always available and ready to send. Options to consider include a checking or savings account, or a cash management account offered by brokerage companies. Learn more about keeping separate accounts.