More Tax Deductions

More Insurance Deductions: The taxpayer can deduct malpractice insurance that covers personal liability for professional negligence.

Workers Compensation: Set by state law, this covers any claims for bodily injuries or a job related disease suffered by employees in the taxpayers business, regardless of who is at fault.

State Unemployment Insurance: Contributions made to a state unemployment fund. These are tax deductible if they are consideredtaxes
under state law. Check with your state law for more information.

Overhead Insurance: This insurance pays the business overhead expenses if the taxpayer has long periods of disability which is caused by injury or sickness, and is tax deductible.

Business Interruption Service: This pays the taxpayer if their business is closed down due to fire or other cause, and is also tax deductible.

Life Insurance: This is only tax deductible if the taxpayer is not directly or indirectly the beneficiary under the contract.

Automobile Insurance: The insurance paid that covers the vehicles used in the course of the taxpayer's business. If the taxpayer uses a vehicle partly for personal use, only the business use is deductible. Also, if the taxpayer uses the standard mileage rate, the automobile insurance cannot be deducted.

One very important thing, the taxpayer cannot deduct the expenses in advance, even if the expenses are paid in advance. For example, if you paid insurance for 2007 and 2008, you can only deduct the expenses for 2007, and the 2008 insurance the next tax year.

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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.

Tax Deductions That Can Be Taken

Deductions For Self-Employed and Independent Contractors

Let us take a look at some of the tax deductions that can be taken if you are self-employed or an independent contractor.

Business Expenses: In order to be tax deductible they must be both ordinary and necessary. If an expense is partly business and partly personal, separate the business part. The business expenses are reported on Schedule C.

Bad Debts: A business bad debt is one that comes from operating a trade or business but the debt is not collectible. Report this on Schedule C, Line 27. For all other non-business bad debts, they are deductible as short term losses on Schedule D.

Car Expenses: The cost of maintaining and operating a vehicle for business purposes are tax deductible. You can either use standard mileage or actual expenses, whichever gives you the best benefit. This includes going from one workplace to another in the course of business, visiting clients, and going to a business meeting away from your regular workplace. Keep a daily log of all miles driven and business miles driven, and keep receipts for gas, tolls, oil changes and the like.

Depreciation: You may acquire property for your business that you expect to use more than a year. Instead of deducting the entire cost as a business expense, spread the cost over more than one tax year and deduct part of the cost each year. I will go more into depreciation in the future.

Gift Expenses: You can deduct no more than $25 for business gifts given directly or indirectly to any one person during the course of the tax year.

Insurance: You can deduct fire, theft, storm, accident or similar insurance, credit insurance on losses from unpaid business debts, and medical insurance for employees. There are many other types of insurance you can deduct. I will cover those in the future.

This is only the tip of the iceberg on what can be deducted. Stay tuned for more on deductions.

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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.