Accounting and Tax
Tax Breaks for Self Employed: How to Lower Your Tax Bill Legally
Being self-employed gives you a lot of flexibility, but it also means handling your own taxes, which can get expensive if you’re not paying attention. The good news is that there are many tax breaks for self employed individuals that can significantly reduce how much you owe. Whether you’re a freelancer, small business owner, or OnlyFans creator, these tax deductions can help you keep more of what you earn and lower your overall tax burden.
The key is knowing what qualifies, how to track your expenses, and which IRS rules apply to your specific situation.
What Are Tax Breaks for the Self-Employed?
Tax breaks for the self-employed are deductions and credits that reduce your taxable income. These include everyday business expenses, startup costs, home office write-offs, and more. The IRS allows you to deduct any expense that’s considered “ordinary and necessary” for your line of work.
To claim these deductions, you need to report your income, keep detailed records of your expenses, and file the correct tax forms. Most self-employed people use Schedule C along with Form 1040 and Schedule SE.
Common Tax Deductions for Self-Employed People
A lot of self-employed people end up paying more taxes than they should simply because they don’t know what they can write off. If you’re earning money through your own business, even as a sole proprietor or content creator, there are plenty of expenses you can deduct legally.
Below are some of the most common tax deductions available to freelancers, OnlyFans creators, and other independent earners. Each of these can help lower your taxable income if used properly.
| Deduction Type | Description |
|---|---|
| Home Office Deduction | If you use part of your home exclusively for work, you can deduct a portion of your rent, utilities, and more. |
| Health Insurance Premiums | If you pay for your own health insurance, you may be able to deduct the full premium. |
| Business Expenses | Things like advertising, software, subscriptions, and professional services are all deductible. |
| Startup Costs | If you recently started your business, you can deduct up to $5,000 in costs during your first year. |
| Self-Employment Tax Deduction | You can deduct half of your self-employment tax from your total income. |
| Internet and Phone Bills | If you use these services for business, you can deduct a percentage of the costs. |
| Office Supplies | Pens, notebooks, printer paper, planners, and even some decor used strictly for work can be written off. |
| Business Travel Expenses | If you travel for work, costs like airfare, hotels, and meals may qualify as deductions. |
How to Calculate Your Self-Employment Tax and Deduct It
If you’re self-employed, you pay both the employer and employee portion of Social Security and Medicare taxes. This is known as the self-employment tax, and for most people, it adds up to 15.3%.
Here’s how to calculate it:
- Start with your net business income. This is your revenue minus your expenses.
- Multiply that amount by 92.35%. This is the IRS adjustment to calculate your taxable self-employment income.
- Take that number and multiply it by 15.3%. That’s your self-employment tax.
You can deduct half of that self-employment tax from your total income when filing your taxes. While this doesn’t reduce the self-employment tax itself, it does help lower your regular income tax bill.
The Home Office Deduction: A Must-Know Write-Off
The home office deduction can make a big difference, especially if you work from home full time. The IRS offers two ways to calculate it:
- Simplified Method: Deduct $5 per square foot of office space, up to 300 square feet.
- Actual Expense Method: Deduct a percentage of your rent, utilities, repairs, and other expenses based on how much of your home is used for business.
To qualify, your home office must be used regularly and exclusively for work. It also needs to be your primary place of business. That means if you’re shooting content, editing, managing emails, and storing supplies all in one space, you’re likely eligible.
Write-Offs That Are Easy to Miss (Especially for Creators)
If you create content online, whether it’s on OnlyFans or YouTube, you might have business expenses that aren’t so obvious. These are still deductible if they’re necessary and used only for your business.
Here are a few write-offs that many digital creators overlook:
- Beauty products, props, or costumes used for filming
- Lighting equipment, tripods, and camera gear
- Editing software like Final Cut Pro, Canva Pro, or Adobe tools
- Paid promotions or ad spend on Instagram, Twitter, or Reddit
- Wi-Fi and phone bills if used for business purposes
- Business-related online courses or education programs
As long as these costs are tied to your business and not for personal use, they’re usually tax-deductible. Be sure to save receipts or credit card statements and make a note about what the expense was for.
Don’t Forget Quarterly Taxes
If you expect to owe at least $1,000 in taxes for the year, the IRS wants you to pay estimated taxes every quarter. These are due in April, June, September, and January.
Missing these payments can lead to penalties, even if you pay the full amount by tax time. To stay on track, use Form 1040-ES or talk to a tax professional to calculate your estimated payments. You can base them on last year’s numbers or your projected earnings.
What Tax Forms Do Self-Employed People Use?
Here’s a quick list of the most common IRS forms you’ll need:
- Schedule C – Used to report your business income and expenses
- Schedule SE – Calculates your self-employment tax
- Form 1040 – Your main tax return
- Form 8829 – Used if you’re claiming the actual home office deduction
- Form 1099-NEC or 1099-K – You’ll receive these if you’re paid through a third-party platform
If you’re running an OnlyFans account or similar online business, expect to get a 1099 from the platform if you’ve earned $600 or more.
FAQs
What tax breaks are available to self-employed individuals?
Self-employed individuals can claim deductions for business expenses, home office use, health insurance, and more. These tax breaks help lower your taxable income, so you pay less in taxes overall.
Can I write off my internet and phone bill?
Yes, you can deduct a portion of your internet and phone bill based on how much you use these services for business. It’s important to keep records and calculate a reasonable percentage.
What if I don’t pay estimated taxes?
If you don’t make your estimated quarterly payments and end up owing more than $1,000 in taxes, the IRS may charge penalties and interest. Paying quarterly helps you avoid surprises and fines.
Are business purchases like clothing or makeup tax-deductible?
They can be if used specifically for business purposes. For example, if you buy makeup or wardrobe items solely for filming or photographing content, those purchases may qualify as business deductions.
Conclusion
Self employed individuals have access to valuable tax write offs that can significantly lower what they owe. From business startup costs and office expenses to even your education bills, every deduction helps reduce your total earnings. If you earn OnlyFans income from exclusive content, you can still claim deductions for business use of your space, software, and equipment just like any other small business owner.
It is also essential to calculate self employment tax correctly and make estimated tax payments throughout the year. Whether you are filing a personal tax return as a single or joint filer, you may qualify for credits like the earned income tax credit. At OFCPA, we help self employed creators understand how to pay self employment tax properly, meet Internal Revenue Service requirements, and keep more of their income.
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