For 2017, TaxAct has created Freelancer, a new product specifically designed for taxpayers who freelance, perform contract work, or are otherwise self-employed.
As a self-employed person, you have more opportunities for tax deductions than you would as an employee. In addition, the deductions you take related to your business save you not only income tax, but Social Security and Medicare tax, as well. It pays to look for every deduction you are entitled to, and TaxAct can help.
If you buy business assets this year, you generally spread the cost of the assets over their useful lives. For example, if you buy an asset expected to last five years, you deduct part of the cost of the asset each tax year for the next six years (the first and last years are partial years for depreciation).
You can depreciate most assets you acquire except land, which does not wear out or get used up.
Most business and investment property is depreciated using the Modified Accelerated Cost Recovery System (MACRS). This method gives you higher "accelerated" deductions in the first years you own the asset, and lower deductions as the asset ages.
You can get an even faster tax benefit from purchasing assets for your business by taking a first-year deduction. You may be able to claim the Section 179 deduction to deduct up to the entire cost of certain depreciable property in the year you place the property in service. You can take this deduction on up to $500,000 in 2017, if you meet the qualifications.
The IRS also allows a special depreciation allowance equal to 50% of your basis in depreciable property that you acquire during the year, reduced by any Section 179 deduction you claim. This special allowance only applies to original-use, or new, assets. However, property you buy for personal use and later convert to business use meets the original-use requirement.
TaxAct helps you determine the best way to take depreciation on business assets and calculates depreciation on Form 4562, Depreciation and Amortization.
You can deduct ordinary and necessary expenses for operating your business as a self-employed person. These expenses may include supplies, utilities, advertising, contract labor, insurance, licenses and fees, subscriptions, dues, and so on.
If you have an expense you could deduct as an itemized deduction or with your business, be sure to allocate the business portion properly. You generally receive more tax benefit by taking a business deduction than an itemized deduction.
A business deduction not only reduces your adjusted gross income, possibly helping you qualify for other tax benefits, but it reduces your income subject to self-employment tax.
May 10 — Employees who work for tips
If you received $20 or more in tips during April, report them to your employer Details
May 10 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2018. This due date applies only if you deposited the tax for the quarter timely, properly, and in full.
May 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in April.