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If you’re self-employed, you already have a lot of taxes to pay—self-employment tax, income taxes and more. Want to make sure you’re saving as much on taxes as possible?
You’ve come to the right place.
Whenever you file your taxes, you have the option to deduct—or write-off—qualified business deductions on your tax return. Tax deductions work to lower your tax bill by reducing your taxable income.
When you’re self-employed, there’s a lot of tax deductions you may be eligible for that you may not even realize. In order to save the most on your next tax return, check out our list of all the self-employment tax deductions you might be eligible for.
Please remember that this is generalized advice, and may not apply to every individual. If you have questions about your specific tax situation, you should consult a tax professional.
Remember, in order for something to be considered a qualified business expense (and therefore tax-deductible), it must be an ordinary and necessary business expense.
For example, staying at a hotel while you’re on a business trip for a conference relevant to your job is an ordinary and necessary expense. Staying at the Ritz-Carlton is not.
This is probably the most common self-employment tax deduction. When you’re filing your taxes, the Schedule SE (Form 1040 or Form 1040-ES) will help you calculate your deduction for this.
In short, all self-employed individuals have to pay the self-employment tax, which is currently set at a tax rate of 15.3%. If you’re employed by a company, the company pays half (7.65%) and the employee pays half (7.65%). However, when you’re self-employed, you’re responsible for the entire portion.
The good news is that you can deduct up to 50% of what you paid in self-employment taxes in figuring your gross adjusted income (which means you’ll have a lower income tax bill). This is meant to adjust for the 7.65% that would ordinarily be paid by your employer.
If you’ve completed any training, ongoing education, courses or the like to continue your career or business in the past year, you can deduct the cost of these training or courses from your taxes.
In order to count as a qualified expense, the training must be related to your current role (i.e. not upskilling or training for a career change). According to the IRS, any such training or education must “maintain or improve skills needed in your present work.”
You can deduct educational expenses including:
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Do you drive for work?
If so, then you can be getting tax deductions for every mile driven for a business expense. This includes things like:
In short, any miles driven between your regular place of work and a secondary location for business purposes are tax-deductible. If your regular place of work is your home, you can deduct any business-related trips from your home to the business-related location or errand. If you’re not getting reimbursed already for your mileage (say, from a place of employment), you can deduct them from your taxes!
The IRS standard rate for the second half of 2022 is 62.5 cents per mile. That means every 1,000 miles of recorded business mileage is worth $625 back in tax deductions!
Wondering how to track mileage for taxes and keep everything IRS-compliant? Everlance—the #1 rated mileage tracking app—can easily and automatically record your mileage, total it up, provide tax-ready reports, help you keep track of expenses and deductions, and more.
On the road for work? If you’re traveling long distances, you can deduct more than just your mileage. Business meals, transportation costs (like mileage, flight costs, train tickets, Uber costs), lodging and more are all deductible.
In order for a trip to qualify as a business expense, it needs to meet at least the following criteria:
Your business travel expenses (aside from meals) are 100% tax-deductible, but keep in mind they must be reasonable and necessary expenses, and must meet the above criteria. Keep especially careful records, as the IRS often checks these very carefully.
If you’re self-employed and contributing to an individual retirement account like a solo 401ks or SEP-IRAs, you can deduct contributions from your taxes. The maximum deductible amount varies based on the type of plan you’re contributing to, but you can find all the details on the IRS’s page for self-employed retirement plan tax deductions.
Almost every business needs some basic office supplies—whether that’s business cards, printing paper, ink, pens, post-it notes, paper clips, a stapler or other miscellaneous supplies, these are all tax deductible business expenses.
Just be sure to keep careful track of your business spending, and keep your receipts. An expense tracking app, like Everlance, can help make tracking work expenses super easy. Simply snap a photo of your receipts to store them and track expenses, or connect business-related cards to track expenses automatically.
If your business or self-employed work requires specialized software, equipment or tools, these are tax-deductible as long as they’re reasonable and necessary for your business.
For example, a professional photographer could easily make a case for needing a subscription to Photoshop. A Doordash driver could not—but a Doordash driver could deduct the costs of insulated bags, carrying backpacks and other tools or supplies that are relevant to food delivery.
If you drive for work and track mileage or expenses with Everlance, even your Everlance subscription is tax-deductible!
When you’re self-employed, making sure your medical expenses are covered can be a huge headache. One way to make this easier? Ensure you’re deducting eligible medical and health expenses on your taxes!
If you had a lot of healthcare expenses this year, you may be eligible to deduct some of these costs from your taxes. In order to deduct medical expenses on your taxes, you must itemize your deductions. In addition, you can only deduct medical expenses that exceed 7.5% of your adjusted gross income.
For example, if your adjusted gross income is $45,000, you would only be able to deduct medical expenses beyond $3,375. For more details on what you can deduct, you can check the IRS website for details about medical deductions.
If you pay for your own health insurance as a self-employed worker, any health insurance premiums you pay out of pocket for policies covering medical care are tax-deductible. A few caveats apply:
These are technically an adjustment to your income rather than an itemized deduction—so you can claim these even if you’re not itemizing deductions. Instead, you’ll deduct the amount you paid from your income to lower your adjusted gross income, and therefore, lower your tax bill.
For more details, check the IRS website.
Work from home? Recently bought a new house? Doing renovations to your home office? There are lots of home deductions for taxes if you’re self-employed, and even some tax breaks for homeowners, regardless of where you work.
If you have a home office or work from home as a self-employed worker, you can take a home office deduction (in some cases, even if you rent your home!). A few caveats:
If all of the above apply to you, there are two ways to calculate the home office deduction:
The simplified calculation: Multiply the office’s total square footage by $5 (up to 300 square feet) and deduct this amount for your home office deduction.
The regular calculation: In order to calculate this option, you will deduct the total allowable home expenses for the percentage of your home that your home office occupies. To calculate, first find the percentage of your home that your home office occupies (i.e. your home office square footage divided by your home’s square footage).
Then, multiply the percentage you calculated by the total of your home’s allowable expenses (this can include things like rent, mortgage interest, insurance, utilities and so on).
Keep in mind that this deduction is regularly abused and therefore can be a red flag for the IRS and frequently trigger an IRS audit. Therefore, it’s essential that you ensure you’re eligible for it before claiming it.
If you’re self-employed and work primarily from home, you can deduct internet and phone bills (along with other bills that help you complete your primary job duties) from your taxes. Remember though, you can only deduct the portion of these expenses that relate to your home office use.
For example, if you use your internet for 6 hours a day for work, and 4 hours a day for personal use, you should deduct only 60% of your internet bill on your taxes.
A tax write-off is another phrase to describe a tax deduction.
Tax deductions—or tax write-offs reduce the amount of taxes you owe by lowering your taxable income. For example, if your overall income was $50,000 and you have $6,500 in tax deductions (the amount that the average Everlance user finds effortlessly!), that would lower your taxable income to $43,500, therefore lowering your tax bill.
The "standard deduction" is a flat-rate dollar amount that reduces your taxable income. Even if you have no other deductions or tax credits, you can take the standard deduction to lower your tax liability.
You cannot itemize and take the standard deduction—you have to choose one or the other. As a result, it's worth figuring out if itemizing deductions will net you a larger tax reduction. If not, simply take the standard deduction.
The standard tax deductions for 2022 are:
Single or married filing separately: $12,950
Married filing jointly: $25,900
Head of household: $19,400
Self-employment tax covers Social Security and Medicare for self-employed individuals.
For W-2 employees who work for a company, their employer pays half of what’s called “FICA tax,” and the rate is 7.65%. Employees also pay 7.65% for FICA taxes on their income (that’s why you’ll have taxes taken out of each paycheck as an employee for Medicare and Social Security).
However, as a self-employed individual, you’re both the employee and the employer, so the bad news is… you’re responsible for both of those tax bills, bringing your self-employment tax rate to 15.3%.
The good news is that this self-employment tax is calculated based on your net income—that is, your income after any eligible business expenses have been deducted. Also, more good news? The 7.65% freelancers pay as the “employer” share of their FICA taxes is an eligible write-off against your income taxes.
To file self-employed taxes, you’ll need to fill out the following forms:
These forms will help you calculate your adjusted gross income, the amount of deductions you’re eligible for, and the amount of taxes you’re liable for. You can fill them out by hand, through a tax software like TurboTax, or have a tax professional manage them for you.
For a step-by-step guide to filing and paying self-employed taxes, check out our self-employed tax guide.
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Of course, every situation is unique—you may be eligible for all of these deductions, or only some.
Finding and claiming all of your tax deductions is an important way to save money as a self-employed individual—but it can be difficult!
Thankfully, Everlance can help you find and claim business expenses and deductions you might have otherwise missed. Everlance’s Instant Deduction Finder scans your lists of transactions and expenses for potential deductions, and populates a list for you to review. Once you’ve reviewed your potential deductions, you can get an IRS- or accountant-ready report of your eligible deductions.
Even better: Everlance can help you effortlessly track mileage and business expenses throughout the year so you’re all ready come tax time. Track mileage automatically for every business drive, manage expenses and more, all in one convenient app.
Did you know the average Everlance user finds $6,500 in tax deductions effortlessly? Get started for free today and start saving.
We help people save time and money. At Everlance, we're on a mission to empower mobile workers and businesses. That sometimes leads us to generalize tax information. Everlance team members are not certified tax professionals. If you need help with your specific tax situation, please reach out to your tax advisor.
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