BOSTON (CBS) – If you are self-employed your Schedule C is very important. There are some tax breaks worthy of spending some time on.
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You can claim a 100% deduction for your health insurance costs. This is a very expensive item in anyone’s budget. This deduction does not go on your schedule C but on the first page of the 1040.
If you make a capital purchase for your business you normally would depreciate it. That is expense it over the life of the asset, usually 3 to 5 years. Small business owners can write off some of their equipment in the year they purchase it if they qualify for Section 179 Expenses. Last year Congress increased the section 179 limit to $500,000 permanently.
So, take the time to evaluate what your profit will be this year and what your business needs are. New equipment; a computer, printer, a smart phone, office furniture, software, table saw, chain saw, truck, oven, van. The equipment must be put into use by December 31 to get the deduction.READ MORE: 'Get Vaccinated And Get Boosted': Gov. Baker Pushes COVID Shots In Brockton
If you are using your car in your business and do not itemize your expenses, the Standard Mileage Rate for this year is 54 cents a mile. This is the mileage rate for the cost of operating your car, van, pickup, or panel truck.
Do not forget retirement planning. You can set up a SEP-IRA by the end of the year. This is a Simplified Employee Pension Plan for yourself and if you have employees, you will need to include them as well. You can contribute up to 25% of your income with a limit of $54,000 for 2016. The business makes the contributions for you and your employees.
If that’s too much bother at least set up an IRA to shelter some of your profit this year. Limits are $5,500 for this year with a catch-up provision of $1000 if you are over 50! And you have until you file your tax return next year to make your contribution.MORE NEWS: Car Involved In Holbrook Crash Was Stolen From Amazon Driver, Police Say
One more thing: If you don’t have health insurance because you thought it would cost too much you will be penalized. The Affordable Care Act (ACA) requires every individual, with some exceptions, to have qualifying health insurance coverage or owe an “individual responsibility payment”.