What you need to know Definitely seek professional help with this. Go ahead with an idea of what your tax advisor will say. Learn about QBID.
It’s tax season again, and I’m going to describe a tax deduction specifically for self-employed insurance agents.
First and foremost, hire a professional to help you prepare your tax return.
The following is my understanding only and includes the fact that an ordinary expense is a common or accepted expense in our industry. A necessary expense is an expense that is useful and appropriate for your business.
Second, everything you use for both home and work needs to be broken down into specific percentages.
For example, suppose you have a 400 square foot home office.
If your entire house is 2,000 square feet, you can only deduct 20% of your mortgage payments, insurance, utilities, repairs, etc.
I took this information from Publication 535; check that there is no more recent one.
This may give you a full overview of what you can deduct, to help you discuss this with your tax advisor.
Car allowance Mileage driven. Gasoline. Oil. Repairs. Depreciation. Parking fees. Tolls. Registration fees.
The standard mileage rate for 2022 is 62.5.5 cents per mile.
Use Schedule C and Form 2106 for these items.
State Continuing Education Licenses. Renewals. Course. Certificates. Subscriptions to professional, technical and commercial journals dealing with your field of activity. Books. Insurance Health insurance. Long term care insurance. Dental insurance. Business insurance. Part of your home insurance. Car insurance.
For these items, use Schedule A, Form 2106, and Form 1040. Note that you can only deduct insurance if it’s for your business or if you’re self-employed.
For home insurance, you can deduct a portion of the cost based on the square footage of your home office.
Business trips Meals and entertainment. Flights. Baggage fees. Taxis. Hotels. Tips.
These expenses go on Form 2106.
Half of the meals and entertainment tab can be deducted for business-related meals and entertainment.
You should keep receipts, make a guest list, and record the purpose of the meeting.
Note that if the meal is lavish or outrageously expensive, it will not count as a valid deduction.
Office space Home office. Utilities. Heat. Lights. Power. Telephone service, but only for long distance calls or a second line (the first line is not deductible). The Internet. Water. Waste. Office. Repairs Reconditioning of floors. Repaint interior or exterior walls. Cleaning and repairing roofs and gutters. Repair plumbing leaks.
Here, use Form 8829, Schedule C, and Schedule A.
For these deductions, divide the square footage of the office space by the square footage of the entire residence.
Once you have determined the percentage of your home that is set aside for your business, you can calculate the above deductions.
Office supplies and equipment Computer. Printer. To scan. Paper. Ink. Software. Maintenance. Paperclips. Postage stamp. Presentation folders. Copy charges. Night deliveries. Stationery store. Pens. Paper. Stapler. Document sign. Internet charges. Greeting cards.
Use Appendix C.
To deduct the cost of your computer, you must use it at least 50% for your business.
Random
Publicity.
Charitable donations.
