What are tax deductible expenses for self-employed individuals?

Good recordkeeping comes in handy at tax time for self employed individuals. Filing is on schedule C which is not difficult to fill out and no balance sheet is required for your business.

Keep track of your car mileage business vs. personal and claim either the actual cost of the vehicle ownership or the IRS standard rate. You can deduct half of business lunches and other business entertainment. Also claim dues and subscriptions that are related to the business. Claim costs of cell phone and fax, Internet connections, office supplies, fees you pay to other professionals and for services and products that you need in your business. You would want to use Quicken or some other personal finance software that would make it easier to separate your spending into deductable categories.

You will also need to report all your income from self employment which may be sales of products or services. If products you can deduct the cost of the products you sold including their raw materials. You may be required to show that you have some items in inventory which is a reduction of what you can deduct. In general, other than inventory accounting, you will be cash basis.

Hope this helps.