How to File Small Business Taxes on TurboTax Intuit TurboTax Blog

You can claim your expenses directly related to your business, lowering your income reported on Form 1099-K. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund—guaranteed.

We offer free one-on-one audit guidance year-round from our experienced and knowledgeable tax staff. We’ll let you know what to expect and how to prepare in the unlikely event you receive an audit letter from the IRS. Talk live to an expert who can give you one-on-one advice as often as you need.

Your Contractor Tax Questions Answered

• There are also certain income-based restrictions that can limit the amount of your charitable deduction.
• Employees of a regular 9-to-5 job cannot deduct the cost of driving to and from work.
• Since your business income and expenses are ultimately treated as personal income and expenses, you don’t even need to file a separate federal income tax return for your business.
• You may not know how to input complicated tax items, such as the Section 179 deduction amount—and TaxSlayer’s messaging isn’t particularly helpful.
• When you file your taxes, you’ll need to fill out Schedule C (Form 1040), Line 24a for travel and Line 24b for meals.
• Filing your small business taxes accurately and on time helps you stay compliant and in good standing with the Internal Revenue Service (IRS).

You can’t take this tax deduction if you work from home occasionally. On the other hand, if you volunteer your time for a charity, any unreimbursed out-of-pocket expenses might be deductible. For example, if you bake a cake for a charity fundraiser, you can deduct the cost of the ingredients (although you can’t deduct the value of your time). You’ll also be happy to know that you might be able to claim a charitable deduction for your generosity. But if you’re operating your business as a sole proprietor, you must claim the deduction in the same manner as any other person. That means you must claim it as an itemized deduction on Schedule A of Form 1040 (instead of on Schedule C or Schedule 1), which also means you can’t also claim the Standard Deduction.

TURBOTAX ONLINE/MOBILE OFFERS & PRICING

Self-employed people who must travel away from home for business can write off certain related expenses. However, to be deductible, travel expenses must be ordinary (common and accepted in your trade or business) and necessary (helpful and appropriate for your business). You’re going to run up against plenty of things you’re probably not familiar with – such as business taxes. Typically, the amount you should set aside depends on your tax bracket and the tax deductions to which you may be entitled. Generally, it may be wise to set aside about 20% of your self-employed earnings, or you can use our self-employment tax calculator to estimate the amount.

Eventually, for more complex tax situations, you may need additional documents like mortgage statements or other detailed financial information. If you don’t have your forms on hand, you can auto-import your info from your W–2s or 1099s directly from more than a million participating employers and financial institutions. Whether you’re an investor, independent contractor, or self-employed, we’ll provide complete coverage and guide you step-by-step to get you every dollar you deserve, guaranteed. Work-related expenses reduce your taxes by lowering the amount of self-employment income you get taxed on. For example, if you made $50,000 in self-employment income and had $5,000 out-of-pocket expenses, you’d only get taxed on $45,000.

Investment and Self-employment taxes done right

The good news is that filing self-employment taxes doesn’t have to be overwhelming. You might even qualify for tax credits and deductions that could lower what you owe. You can claim 50% of what you pay in self-employment tax as an income tax deduction. For example, a $1,000 self-employment tax payment reduces taxable income by $500. In the 25 percent tax bracket, that saves you $125 in income taxes. This deduction is an adjustment to income claimed on Form 1040, and is available whether or not you itemize deductions.

If you use the vehicle for business purposes only, you’re allowed to deduct the entire cost of ownership, up to a certain amount. This includes lease payments, gas, registration fees, tolls, repairs, and commercial auto insurance premiums. If you operate your business from home, you can take the home office deduction. To qualify for this tax deduction, you must use part of your home for business exclusively, and on a regular basis.

• The point is that federal, state, and local governments can tax you in many different ways.
• The standard mileage rate is 67¢ per mile driven for business for the 2024 tax year (increasing to 70¢ per mile for 2025).
• Taking the standard mileage deduction is usually the best option, but for some, the actual cost method works in their favor when the mile count is low.
• For example, TurboTax Self-Employed (also known as TurboTax Premium), one of our online products, may be right for you if your business is a sole proprietorship or single-member LLC.
• The enhanced deduction for businesses that donate food is also limited to 15% of your business net income.

Tax Deductions and Credits for Consultants

For purposes of this deduction, a “car” includes a van, pickup, or panel truck. Establishing a sole proprietorship is typically straightforward and less costly than setting up other business entities. A sole proprietor can cease business operations without much formal procedure, too. Below is more information regarding the TurboTax Premium  tax deductions for some of the most popular careers.

What self-employed expenses can I deduct?

You might already be aware of deductions like business expenses, home office costs, or retirement contributions, but this tool helps you get even more granular. By selecting your industry, you can identify deductions that apply to your niche, like prizes for giveaways, app fees, and even the uniform you wear. If you’re an independent contractor, businesses will request a W-9 form.

This is a great tool to help you save on taxes with a personalized approach to self-employed business expenses. Fortunately, there are lots of tax deductions for self-employed individuals. These deductions lower your tax liability and reduce how much you owe. Self-employed tax deductions are available to 1099 independent contractors, sole proprietors, single-member limited liability companies (LLCs), and other workers who meet the requirements.

TurboTax Live Assisted Business

This includes general office supplies, such as pens, paperclips, printers, envelopes, postage stamps, and the like. However, you can’t deduct payments for self-insurance reserve funds, policies covering lost earnings due to sickness or disability, certain life insurance and annuities, or insurance to secure a loan. To be deductible, the wages must be both reasonable and for the performance of services. There are two special rules that can result in either a greater depreciation deduction or a full deduction for the cost of property acquired during the tax year. For the 2024 tax year, the first rule – dubbed “bonus depreciation” – permits 60% of the property’s cost to be deducted if it’s acquired in 2024. Standard depreciation deductions are allowed for the remaining cost basis.

But even if you don’t qualify for the IRS Free File program, you can file at no cost using the IRS Free File Fillable forms. You must do more work by completing the tax forms yourself without guidance, and there’s no option for state tax preparation and filing. Lastly, most online tax software allows you to file electronically, pay any taxes due and request direct deposit payments of any refund. We got tired of TurboTax constantly trying to upsell you throughout the tax filing process with add-on features like IRS audit representation and identity theft insurance. Since these tools aren’t needed to complete your tax return, the interruptions can aggravate when you’re trying to file.

Our team selected TaxSlayer Self-Employed as the best low-cost tax software in this category because it charges you just over $100 to file your federal return and one state tax return. Similar self-employed options offered by TurboTax and H&R Block can charge close to $200 for filing state and federal taxes. Since you have to pay your own health and dental insurance premiums, you may be eligible to deduct those premiums on your taxes.

If you’re furthering your education, you might also qualify for the American Opportunity tax credit or Lifetime Learning credit. However, you can’t “double dip.” So, any educational expenses you deduct as a business expense on Schedule C can’t be used to claim these tax credits (and vice versa). If you’re seeking a no-cost way to file, you can use the IRS Free File program. The program allows taxpayers to file their federal tax returns for free, answering guided interview-style questions; in some cases, state tax filings are free as well. Although another TaxSlayer competitor, Cash App Taxes, allows self-employed people to file tax returns completely free, it lacks customer service. Our analysis gave customer service a lot of weight, as taxes for the self-employed can be complex and unintuitive.

So, if you’re venturing out on your own as a new sole proprietor, you’ll have a basic understanding of the federal tax code provisions and IRS rules that apply to you. If you don’t claim the standard mileage deduction, you might be able to deduct other expenses from your income, lowering your taxes. Writers, realtors, freelancers, and other self-employed individuals can leverage the insights offered by the self-employed tax deduction calculator to maximize deductions when filing self-employment taxes.

TurboTax makes this step easy by automatically importing your W-2s, 1099s, and bank transactions. Both Full Service Business and Live Assisted Business feature a Business Tax Guarantee. TurboTax guarantees that your return’s calculations will be 100% accurate, ensures you will maximize your tax savings, and provides you with support if your return is audited. The information provided on this website does not constitute insurance advice. All content and materials are for general informational purposes only. Complete Insureon’s online application and contact one of our licensed insurance professionals to obtain advice for your specific business insurance needs.

Kemberley Washington is a former staff writer at Forbes Advisor and provides consumer-friendly tax tips for individuals turbotax for self employed and businesses. She has been instrumental in tax product reviews and online tax calculators to help individuals make informed tax decisions. Her work has been featured in Yahoo Finance, Bankrate.com, SmartAsset, Black Enterprise, New Orleans Agenda, and more.