HOW AND WHEN TO REPORT IT
- If you made a profit: You need to pay self-employment tax if your earnings exceeded your expenses. Calculate what you owe on Schedule SE and report it on your 1040.
- If you lost money: It’s worth adding up your business expenses if they exceeded what you earned. In order to claim a loss, thereby lowering your AGI, you must itemize your expenses on Schedule C.
DEDUCT YOUR BUSINESS-RELATED EXPENSES
- Car: Claim the portion of vehicle expenses that relate to business use only.
- Home office: Calculate the percentage of square footage that is devoted to work and deduct that
portion of your mortgage or rent.
- Phones and utilities: Claim the portion of these bills that applies to business purposes.
- Materials: Deduct the cost of supplies you bought that were used to create your product or conduct your business.
- Office: These expenses include paper, printer and computer supplies, as well as mailing or shipping.
- Marketing and education: Any money you spent furthering your career or advertising your services is reimbursable.
For more qualifying business expenses, check Publication 535, “Business Expenses,” at irs.gov/publications/p535.