Work-Related Tax Deductions For Self-Employed
If you are a self-employed professional who takes care of their own taxes, there are certain common expenses concerning your income and work that you may claim during tax time. Generally, expenses can be claimed when the money was spent for something work-related, your employer didn’t reimburse you the money you spent, you have the expense’s official record (receipt or bank statement, for instance), if the expense was for both personal and work use, etc.
Keep reading to learn tips for finding work-related tax deductions for self-employed.
Keep Your Receipts
If you buy anything related (fully or partly) to your work, keep your receipt. Deductions or expenses can considerably bring down the tax amount you should pay every year. Smaller purchases made throughout the year can easily add up to a more significant sum, which is why it pays to keep track and document all work-related purchases.
Know Claimable “Receipt-Less” Tax Cuts
A “receipt-less” deduction is an expense you can claim without a traditional invoice. Examples include home office expenses, internet expenses, and mobile phone expenses. Since these expenses could be related to both work and personal use, it’s important you claim the ones related to work only. If an item or expense has elements of both work and personal use, clearly demarcate the expense and claim the part related to work only.
If you are a small business owner who deals with in-hand cash transactions, make sure you declare them all on your tax return. The Australian Taxation Office (ATO) is smart and employs benchmarking to roughly calculate what you truly earn. In other words, your expenses and earnings get compared to other taxpayers consuming similar goods and services. If there is under-reported income or anything suspicious, your files could be flagged for further inspection.
Gifts and Donations
Check if the organisations you make donations to, such as a charity, have the status ‘deductible gift recipient’ since you could then claim for the donated gifts. Gifts could be financial assets, such as shares and property, or money. Any sum donated that is more than $2 could be claimed. Different rules could apply for other assets based on their value and type.
Hire a Professional
If you are in a major financial soup, managing things on your own should be the last thing on your mind. A reputable BAS and tax agent by your side would ensure your financial commitments are up to date and correct so that you have more time to focus on running your company. Contact Perth Tax People today for all your tax needs.