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Tax breaks can be a boon to the self-employed. If you own your own a Bay Area business — or are thinking about it — here are some tax deductions you may be eligible to claim.<\/p>\nTax breaks can be a boon to the self-employed. If you own your own a Bay Area business — or are thinking about it — here are some tax deductions you may be eligible to claim.<\/p>\n
Self-employment (SE) tax. <\/strong>When you\u2019re self-employed, you have to pay SE taxes on your earnings instead of the Social Security and Medicare taxes that employees and employers pay. You\u2019ll be able to deduct a portion of your SE taxes.<\/p>\n Health insurance. <\/strong>If you\u2019re not eligible for coverage under a plan offered by your spouse\u2019s employer, you can deduct the costs of health, dental, and long-term care insurance premiums paid for yourself, your spouse, and your dependent children. (Requirements apply.)<\/p>\n Office at home. <\/strong>You can deduct a percentage (usually based on square footage) of your mortgage or rent, utilities, property taxes, homeowners insurance, and home maintenance costs. Alternatively, you may use the “safe harbor” method, which allows a deduction of $5 per square foot (up to 300 square feet). But be careful — you must use the space regularly and exclusively for business to claim the deduction.<\/p>\n Thinking about retirement. <\/strong>Deductions for contributions to a tax-deferred retirement plan, such as a SEP-IRA, SIMPLE IRA, Keogh plan, or solo 401(k) plan, will reduce your current tax bill.<\/p>\n Talk and surf. <\/strong>You can deduct phone, fax, and Internet expenses directly related to your business.<\/p>\n Vehicle use. <\/strong>The cost of driving a car for business is deductible. You can use either the IRS standard mileage rate or your actual expenses to compute your deduction.<\/p>\n Interest.<\/strong> Interest on business loans and business purchases charged to a credit card is deductible.<\/p>\n Food, fun, and travel. <\/strong>You can generally deduct 50% of the cost of business meals and entertainment if you meet certain tax law requirements. Other business travel expenses, such as lodging, are 100% deductible.<\/p>\n