Became Self-Employed in 2022? Here Are 4 Tax Write-Offs You Might Be Able to Snag

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Make sure you’re taking advantage of every tax break you’re entitled to. 

Being self-employed can be a mixed bag. On the one hand, you get to run your own show and maintain a work schedule that’s good for you. On the other hand, you might struggle with inconsistent payments and the fact that you have to manage your taxes yourself rather than having them taken out of your earnings.

Now there are certain expenses you might incur in the course of becoming self-employed. But the good news is that many of them can serve as a tax-write off. So if you took the leap into self-employment in 2022, here are some write-offs to look at claiming when you file your tax return.

1. A home office deduction

If you’re self-employed, you can claim a home office deduction provided you have an area of your home used solely for work purposes, and that office is your primary place of business. There are two options for calculating your home office deduction. The first is to simply claim $5 per square foot of office space, up to 300 square feet. The second is to figure out what percentage of your home your office constitutes, and then claim a proportionate deduction based on your home expenses.

Here’s how this might work in practice. Say your home office takes up 200 square feet. The simplified deduction would give you a $1,000 write-off. But let’s say your total home square footage is 2,000 square feet, and you spent a total of $20,000 in 2022 on expenses like heat, electricity, and property taxes. In that case, you can claim 10% of that total, or $2,000, for your deduction.

2. Health insurance premiums

One downside of being self-employed is losing access to employer-sponsored health insurance coverage. If you had to buy your own health insurance last year, it may have put a strain on your budget. But you can generally write off the cost of your health insurance premiums on your taxes.

3. Self-employment taxes

When you’re self-employed, you’re required to hand over 15.3% of your earnings in the form of self-employment taxes. That 15.3% breaks down into a 12.4% tax rate for Social Security and a 2.9% tax rate for Medicare. Half of that sum, however, is deductible on your taxes, so don’t neglect to snag that write-off.

Remember, when you’re a salaried worker, your employer covers half of your self-employment tax bill. When you work for yourself, you have to fork over that entire sum. So it makes sense that you’re allowed to deduct half of it.

4. Office supplies

There may be supplies you need to keep your business running and your records organized. When you buy things like filing folders, cabinets, flash drives, and pens, those are expenses you should be able to claim on your tax return — provided you’ve retained your receipts and know what sum to deduct.

Don’t miss out on tax savings

Self-employed people have plenty of opportunities to lower their taxes. But if you’ve recently switched over to self-employment and this is the first time you’re doing your taxes since then, you may want to consult a professional this time around. A professional may know of write-offs you’re not aware of, so hiring one could result in a larger refund or a lower IRS bill.

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