How self-employment tax works and common self-employed tax deductions - Video

You've tuned into the right video, if you're looking for help on your self-employment taxes and information about self-employment tax deductions. 

Hi, I'm Joe Sasto, professional chef, creator, and like you, a business owner and solopreneur. Taxes can be, well, taxing. Just like kneading dough. Especially when you run your own business and even more so when you're doing it alone. But if you learn how to manage business expenses efficiently, you can tackle tax time with confidence. 

It's a little like mise en place in the kitchen. Having all your ingredients organized and ready to go before you start cooking, to make the process more efficient. So basically like getting all of your documents in order before tax season. 

Self-employed professionals can deduct many business-related expenses. Let's start with six of the most common tax deductions: 

1. Home office 
2. Self-employment tax
3. Vehicle use
4. Retirement contributions 
5. Health insurance 
6. Travel 

Now, you want to work with an accountant professional for up-to-date IRS guidelines and to confirm your tax deduction eligibility. This is simply my take on this as a solopreneur business owner. 

If you use part of your home for business purposes, you can take a deduction based on the square footage of your office. This deduction is available to those who use part of their home regularly and exclusively for business purposes. When it comes to self-employment tax, you're responsible for FICO, also known as the Federal Insurance Contributions Act. Through this, you're paying for Social Security and Medicare contributions. It's worthwhile to note that when you're self-employed, you're responsible for paying both the employer and employee portions of the taxes, as you're essentially both the employer and the employee. If you regularly drive to meet clients or suppliers, you can take advantage of deductions for vehicle mileage, or normal wear and tear. 

While these are some of the more common self-employment tax deductions, there are a lot more you can take advantage of, like the ones I mentioned before: retirement contributions, health insurance, travel, advertising and marketing, software and subscriptions for your business, and even R&D in the kitchen in my case. 

You'll pay self-employment taxes and identify potential tax deductions based on the income reported in the 1099 form. If you're self-employed and want to learn more about how to file 1099, check out the blog resources below. Let's go over the basics. 

A 1099 form is a return you file to the IRS, which includes information about your business. If you're a self-employed person, an independent contractor, a freelancer, or an LLC that does not file as a corporation, and you receive at least $600 in non-employment income during any given calendar year, you'll need to file the 1099 form to accurately file your tax returns to pay the self-employment taxes. Check out QuickBooks Blog resources below if you want to dig deeper into how to fill out a 1099 form, or how to file 1099. 

Now, I know taxes aren't the most palatable subject for some, but tax time can be made easier with QuickBooks Solopreneur. Imagine your accounting and taxes all in one place. Move from books to taxes seamlessly, with visibility into your estimated taxes throughout the year. Beyond the automated expense tracking, you can also track mileage and categorize trips right from the QuickBooks mobile app. Then prepare your tax return and maximize your self-employment tax deductions, with unlimited help from live assistant tax experts powered by TurboTax. 

Pay only when you file. Learn more about self-employment tax deductions with free resources on the QuickBooks Blog. Remember to like and subscribe for more solopreneur resources.