2nd Quarter 2019

Tax Breaks for Side Gigs and Small Businesses

Whether you do freelance work, have a side gig, or run your own small business, it’s important to keep good tax records during the year. That way, you’ll be able to spot all of the tax breaks you deserve when you file your tax return. You’ll file Schedule C to report self-employed income and to deduct business expenses (or Schedule C-EZ if you have no employees and less than $5,000 in expenses).

For example, you may be able to deduct the cost of renting office space, equipment, and supplies you buy for a business, and the cost of a phone line, computers, and software, as well as advertising expenses, legal fees, and business travel (keep records of mileage, parking, and tolls if you drive). See details of eligible expenses in the Instructions for Schedule C at www.irs.gov.

Additionally, you may qualify for the home office deduction if you use part of your house regularly and exclusively as your principal place of business. You may be able to deduct a portion of your rent or mortgage, utilities, property taxes, and homeowners or renters insurance based on the percentage of your home that you use as your office. Or you could use the simplified option, which allows you to deduct $5 per square foot of the home used for business (with a maximum of 300 square feet). For specifics, see IRS Publication 587, Business Use of Your Home, at www.irs.gov.

For more information about taxes for the self-employed or small businesses, see the IRS Small Business and Self-Employed Tax Center at www.irs.gov. And for details about tax issues that apply to side gigs, visit the IRS Sharing Economy Tax Center at www.irs.gov.

Return to top