TAX TIPS (and other stuff)
By Kelly J. Bullis, CPA
2026-January 17th
Under current tax law, some self-employed individuals are entitled to tax breaks comparable to incorporated small business owners using Partnership, Sub-S, or regular C Corporation tax filing.
It’s easy to deduct your health insurance premiums (for you and your family). It’s called an “above the line” deduction on page 1 of your form 1040. This also goes for dental insurance and long-term care insurance.
There are several retirement savings options available. Simplified Employee Pension (SEP) plans, SIMPLE-IRA plans, solo 401k plans and Keogh profit-share plans. All retirement plan contributions are also deductible “above the line” on page 1 of your form 1040.
All businesses, including Self-Employed are entitled to the Qualified Business Income Deduction (QBI) of up to 20% of the business net income. There are some limitations, but this usually works out to be a great benefit to small business owners.
If you use an office in your home, you might be able to deduct the business portion of your home (all costs to provide and maintain the home). To qualify, you must use the space regularly and exclusively as your principal place of business or as a place to meet or deal with clients, customers, or patients in the normal course of business. It could also be considered your primary place of business if you conduct administrative and management chores there and don’t make substantial use of any other fixed location for those chores.
You are entitled to deduct business related auto expenses. You have two options. One is keeping track of business miles, then multiplying them by the current IRS mileage rate (70 cents per mile). The other option is to deduct actual expenses, including depreciation. For new vehicles, if the business use is higher than 50%, you can take a large up-front deduction for the business portion of the purchase price (called bonus depreciation).
If you have children under 18 years old working as employees in your business, you don’t have to pay employer share of payroll taxes (Social Security and Medicare) on their wages. PLANNING TIP: You could pay your children on the high end of the pay scale for the work they do and have them put the maximum contribution into an IRA. A great way to teach them about saving for retirement and getting them started on that early.
You also get to deduct half of your self-employment tax as an “above the line” on page 1 of your form 1040.
Sometimes it pays to just keep it simple. Of course, if you do not want to pay self-employment tax on all your business income, you might want to consider changing your business tax structure to a Sub-S.
Have you heard? Prov 25:6 says, “for by wise guidance you wage your war, and victory is in many advisors.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com Also on Facebook.
