A lot of self-employed people are confused about the standard deduction. Did you know that you can take it AND still deduct business expenses?
This video dives into the facts every single freelancer should know about the standard deduction. This is the $12,000 tax break that every single American tax filer gets.
When it comes to taxes, we tend to talk a lot about taking the standard deduction vs itemizing. But that applies for personal deductions, like charitable donations, property taxes, and medical expenses.
If you have less than $12,000’s worth of personal deductions, then there’s no reason to itemize those — the standard deduction will save you more on your taxes. Itemized business deductions, though, are entirely separate. If you’re a freelancer, gig worker, or independent contractor, you can write off those expenses ON TOP OF the standard deduction.
Why is this so important for freelancers and 1099 contractors to know? Because of how self-employment tax works. If someone who works a W-2 job makes less than $12,000 a year, then the standard deduction makes it so they don’t have to pay income tax on that at all. Your income from self-employment, though, will still be taxed even if you make less than $12,000. The standard deduction won’t cover you!
That’s why it’s crucial for all self-employed people to keep track of their business expenses — even if they only freelance part-time. You’re going to be taxed on that income regardless, so you should make sure you’re taking every tax write-off you’re legally entitled to.
TIMESTAMPS
0:00 - Intro
1:29 - What is the standard deduction?
2:18 - Understanding personal vs. business deductions
4:09 - Tracking your 1099 expenses
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OTHER VIDEOS TO WATCH
👉Tax Write-Offs Explained: https://youtu.be/2-D7BiB5Tw8
👉Self-Employed Tax Breakdown: https://youtu.be/BzwwCUp1SD8
👉Business Meal Tax Deduction: https://youtu.be/ogNMzQHEWBU
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COMMON TAX WRITE-OFFS
👉For rideshare drivers: https://www.keepertax.com/tax-write-offs/lyft-uber-driver
👉For delivery drivers: https://www.keepertax.com/tax-write-offs/postmates
👉For real estate agents: https://www.keepertax.com/tax-write-offs/real-estate-agent
👉For online sellers: https://www.keepertax.com/tax-write-offs/online-seller
👉For freelance designers: https://www.keepertax.com/tax-write-offs/freelance-designer
👉 And more: https://www.keepertax.com/freelancer-tax-deductions
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FREE TAX RESOURCES
👉1099 Tax Calculator: https://www.keepertax.com/1099-tax-calculator
👉How Much Should I Set Aside for Taxes?: https://www.keepertax.com/self-employment-tax-rate-calculator
👉Quarterly Tax Calculator: https://www.keepertax.com/quarterly-tax-calculator
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