15 Self-Employment Tax Deductions in 2022 Fresno Venture Capital Partner Podcast

There are many valuable tax deductions for freelancers, contractors and other self-employed people who work for themselves. Here are 15 big self-employment tax deductions to remember.
Schedule C Tax return filing for Sole Proprietor
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1. The home office deductionIf you work from your home or use part of it in your business, then self-employment tax deductions like this one could get you a break on the cost of keeping the lights on.
What you can deduct: A portion of your mortgage or rent; property taxes; the cost of utilities, repairs and maintenance; and similar expenses. Generally, this deduction is only available to the self-employed; employees typically cannot take the home office deduction.
How it works: Calculate the percentage of your home's square footage that you use, in the IRS’s words, “exclusively and regularly” for business-related activities. That percentage of your mortgage or rent, for example, becomes deductible. So if your home office takes up 10% of your house's square footage, 10% of those housing expenses for the year may be deductible. IRS Publication 587 outlines a lot of scenarios, but note that only expenses directly related to the part of your home you use for business — say, fixing a busted window in your home office — are usually fully deductible.
What else you can do: Choose the simplified option, which lets you deduct $5 per square foot of home used for business, up to 300 square feet — that’s about a 17-by-17-foot space. You won’t have to keep as many records, but you might end up with a lower deduction, so consider calculating it both ways before filing.

2. Health insurance (maybe)If you bought medical insurance policies on your own for yourself or your family, you might qualify for a self-employment tax deduction on the premiums.

What you can deduct: Medical and dental insurance premiums for you, your spouse, your dependents and your children who are younger than 27 at the end of the tax year. Long-term care insurance premiums also count, though there are specific rules. IRS Publication 535 has the details.

How it works: It’s an adjustment to income rather than an itemized deduction, which means you don’t necessarily have to itemize to claim it. But you might be let down, because if you’re eligible to enroll in your spouse’s employer’s plan — even if you choose not to, maybe because it’s more expensive than your own — you can’t take the deduction.

What else you can do: Find out if you can deduct the premiums as a medical expense. This typically works only if you pay your premiums out of your own pocket, and your deduction is limited to expenses that exceed 7.5% of your adjusted gross income. So if your A G I is $100,000, your first $7,500 of medical expenses isn't deductible.

3. Continuing educationYou have to stay smart to run a growing business, and there are self-employment tax deductions for that.
What you can deduct: The costs of “qualifying work-related education,” including things such as tuition, books, supplies, lab fees, transportation to and from classes and related expenses.
How it works: The expenses are deductible only if the education “maintains or improves skills needed in your present work.” In other words, if you’re taking classes to change careers or you're working toward the minimum educational requirements for