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Top Tax Deductions for Consultants

Updated for Tax Year 2016


OVERVIEW

Consultants are likely to have deductible business expenses that can help you save big on your taxes. A checklist can help you account for every deduction you’re entitled to use. Here are the top tax deductions for consultants.


Business Startup and Office Costs

Woman showing a colleague her presentation on a laptop

Launching your consulting business likely required significant upfront investments, called capital investments. You may purchase furniture, telecommunications equipment, computers, and other longer-term investments that will remain in use for at least one year.

  • You can claim the cost of these expenses over a period of several years (a process called amortization).
  • You also have the option of claiming them in one tax year only, using Section 179 expensing, which allows you to claim the total upfront cost immediately up to a $500,000 limit.

You’ll also have a number of operating expenses—costs and bills you’ll need to pay regularly to run your business—that you can claim immediately. These may include:

  • Rent
  • Utility bills (electricity, heat, water)
  • Internet service, phone bills
  • Office supplies (like pens, paper)
  • Printing costs
  • Website hosting, domain registration
  • Software subscriptions: Google Drive, Google Apps, Adobe Creative Suite

Education, Research, and Certifications

Launching your consulting business fresh out of school can come with some serious tax breaks, since you'll be able to take advantage of education tax credits to lower your tax liability.

Continuing education has tax perks, too. Graduate education or courses at a recognized educational institution may mean you're eligible for the Lifetime Learning Credit, which could lower your tax bill by $2,000. You also can write off the cost of:

  • Seminars
  • Webinars
  • Conferences
  • Professional certifications

Don't forget to claim business and professional memberships as business expenses. Typical costs of education and research materials include:

  • Subscriptions to trade magazines
  • Business and consulting books
  • Research services, like Reuters Thomson

Any software or apps you use for productivity, such as Google Drive or Microsoft Office suite, also count as business expenses that can lower your tax liability.

Advertising and Client Service Costs

Marketing your business is essential to your success, and any costs you incur can help you save money on your taxes. You can claim web hosting and domain registration costs, along with any other expenses incurred to set up your website, from the photographer for that perfect headshot to the software you used to design elements of the site.

Claim costs associated with networking such as:

  • Registration for attending industry conferences and events
  • Merchant fees for exhibiting at trade shows, and the cost of setting up your booth.
  • Travel expenses
  • Dining and entertainment expenses
  • Gifts used for your business

Other Tax Deductions to Consider

You're likely to encounter additional business costs you can claim on your taxes, such as:

  • Banking, credit card processing, and financial service fees
  • Tax return and financial software
  • A portion of your housing costs (rent, utility bills) via home office deductions
  • Professional services (including lawyer’s fees)
  • Mileage; fuel and gas costs; vehicle lease or rental; tires; insurance and other travel expenses for the business use of your vehicle

Remember, with TurboTax, we’ll ask you simple questions and fill out the right tax forms for you to maximize your tax deductions.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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