‘Make every penny count’ goes both ways, especially when it’s tax time. Take it in a literal sense and expense tracking can even double your tax returns!
Exactly how much are we talking about when we say independent contractors are missing out on tax benefits? Precisely anywhere between $200 to $800!
It is in the form of money that you have earned and circulated in order to meet the costs of running your independent business, freelance service, rideshare or delivery gig.
This can simply be claimed back when filed with accurate records over a continuous period of time.
We found out 5 tax claims that independent contractors miss out on:
1. Count in your rent
Being an independent contractor does not exempt you from putting together a place where your customers can perch. It can be an office space occupied in your own home or somewhere you are renting.
This is the cost of occupancy and you can come up with an estimate to file for tax deductions! Yes, it is affected by the standard renting price in the locality and more the reason why you should keep an eye open for news on properties!
2. Utilities and stationery
One stapler does not make much of a difference in your tax savings. But imagine the number of pin boxes you have used over time and probably spent worth $50 in total!
Not kidding, tracking petty business expenses will give you the bigger picture and then you can file it all together for a bigger deductible amount.
Same goes for utilities, an estimation of how much you pay for electricity, fuel, gas, water or other such expenses are eligible to be filed for tax deduction.
3. Insurance and repairs
Especially if you are a rideshare or delivery gig driver, vehicle and health insurance, both can be covered by tax returns. Simply because you are an independent contractor trading your labour and expenses to maintain your business smoothly are eligible for tax return.
In this case the two most important business assets being your vehicle and yourself!
4. Interests paid on credit
You heard us right, independent workers can claim tax deduction on the annual interest amount you have paid against any loan or credit you have availed for your business. This is why it is important to redeem certificates on instalments and premiums.
5. Cost of accounting services
Have this trick up your sleeves, track your business expenses during the current year’s tax time and claim the return in the following year.
This cost includes your cost of hiring an accountant, cost of financial solutions or tools you have had to subscribe to and any such other cost incurred for accounting expenses and income.
Do I pass as a sole trader?
Good question, you are a sole trader if
- You are not a salaried employee
- If you are the sole proprietor of a business, service or trade
- If your work is ‘profit’ based
- If you incur regular costs of running the business(s).
The following professions pass for sole proprietorship:
Freelancers like writers, photographers, pet-sitters or independent contractors like rideshare and food delivery drivers, and carpenters. There are as many professions in the list as opportunities for business and services to be availed.
Is there more to being ‘tax conscious’?
We are constantly striving towards prioritising the difference between being financial conscious and financially aware. This can only be achieved when you are in full control over your transactions, savings and taxes.
What are we planning? Keep an eye on the MyGigsters space to be introduced to financial technology that is a game changer for self employed individuals.
No more struggling to get authorised credit, be incharge of how much you spend on your business and recreate the narrative of conditioned flexibility.