At Equinox Business Solutions, we’re proud to provide tax preparation for independent contractors of all types, including truck drivers and many others. An independent contractor is any person who provides goods or services under a verbal agreement or specific contract, and taxes are very different for people under this designation.
One major area where this is true is within tax deductions, which allow you to lower your taxes paid based on certain expenses. The IRS does not correct you if you fail to claim a deduction you qualify for – with that in mind, this blog and our next will go over several important deductions that many independent contractors should keep in mind.
Operating expenses can be a broad term, spanning areas like advertising costs, web hosting fees, internet and phone usage, or even the creation of business cards. Anything that’s a cost of you operating your own business – things that might have been covered by a parent company if you were a full-time employee – falls into this area.
For a home office to qualify as a deduction, it must be used solely for business – it can’t also be a part-time spare bedroom, for instance. It will be deducted based on its size relative to the rest of the house: If your office takes up 10 percent of the house, for example, you can deduct 10 percent of all utilities and expenses. You can also deduct 10 percent of mortgage interest, homeowner’s insurance, repairs and painting expenses. If you rent, you can deduct a portion of rent.
Snacks and Drinks
Many don’t realize it, but you can deduct the cost of providing yourself and any employees with snacks or drinks while working. Cost of caffeine can also be deducted, which is great for coffee drinkers. Meals for you are not included in this category, but if you have employees who eat meals at work, these can be deducted.
Supplies and Materials
Any items you need for conducting business can be deducted, from computers and printers to pens and ink. Books, magazines and newspapers related to your business are also deductible, as are greeting cards sent to clients.
This is a deduction for half the cost of expenses related to entertaining clients, which can be used for things like business meetings and marketing efforts at restaurants, sporting events or golf courses. This deduction is often abused, however, so consult our professionals and follow strict IRS guidelines.