If you’re fed up with how much of your money is going towards taxes, then this list is for you! I’ve compiled 10 of the easiest ways to cut taxes in 2023.
1: Qualified Business Income
As a self-employed individual, you have the ability to deduct 20% of your net profit automatically off the top. This is called Qualified Business Income, and affects self-employed individuals up to a certain dollar amount. So, as long as you’re not making millions of dollars, then you can probably benefit from this deduction!
2: Home Office Deduction
You may already be aware of the home office deduction – but did you know you have two different options? Be sure to take a look at both and choose the one that gives you the greatest deduction amount. The simplified method is where you write off $5 per square foot of office space in your home. The detailed method is where you take your office space / home percentage (divide your office space square footage by your total home square footage) and multiply that by your total utility cost for the year.
3: Vehicle Expense
There are two different options when calculating vehicle expenses. The most common method is keeping track of your mileage. To use this method, you’ll need to keep a detailed log for IRS purposes. It helps to use a smartphone app like MileIQ that tracks your trips for you (and then you can later categorize them into business or personal). The other option is to keep track of your actual expenses.
4: Meals with Clients
If you take a client to lunch or dinner, or have a meeting with a prospective client over a meal, you can deduct half of that amount.
5: Business Travel
If you have to travel to meet with a client in another city to get more business for yourself, then you can write off those expenses.
6: Insurance
If you’re self-employed, then any health insurance that you’re paying for yourself or your family, as long as they’re not covered by an employer, can be written off on your 1040. You can also write off building insurance, cyber insurance, liability insurance, etc.
7: Startup costs
When you start your business, you may incur costs such as the purchasing of equipment, training, consultant fees, accounting fees, etc. These can all be written off on your taxes.
8: Advertising
If you don’t get the word out, then you won’t have a business! So be sure to do some advertising, and don’t forget that you can deduct your advertising costs!
9: Retirement
If you’re self-employed, you can take a deduction for your contributions towards your SEP or IRA.
10: Education
Many professions require continuing education, and you can deduct the expenses for tuition, books, and fees related to that education.