Were you self-employed last year? Learn how to report that taxable income!

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.