How to Find Tax Deductions as an Independent Contractor

An independent contractor works independently and has much flexibility in their schedule. One downside is that they must pay their own taxes. However, independent contractors may claim more deductions then employees thus lessening the amount of taxes due from them.

Difficulty: Moderate

Instructions

1. Claim car expenses as a deduction on your taxes. As long as you use your car for your work, an independent contractor may deduct the actual mileage driven each year for business purposes even if the car is personal.

2. Deduct meals on your tax return. If you take a client to lunch, you may deduct a portion of this on your tax return according to IRS rules. Locate IRS rules on deductions at IRS.gov. However, you must talk about business at least part of the time during the meal.

3. Take your client to a ball game and deduct a portion of the cost. Again, follow IRS rules for the allowable amount and follow the rule of discussing business during the entertainment event.

4. Write off your home office on your taxes when you are an independent contractor. The IRS has a complicated rule about home office deductions but essentially, you must have a separate room where you conduct business and keep your business paraphernalia. Measure the square footage of your office and compare it to the square footage of your house to come up with the allowable percentage that the IRS will let you deduct.

5. Receive a gift and claim it as a deduction to the limit of $25 per recipient per year. Follow the IRS rules about they consider a gift.

Resources

• Find Allowable Deductions By Checking With the IRS.