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Have you considered meal prepping? I'm a mobile massage therapist and I just bring food with me in a cooler. Not deductible either way but saves a ton of money. I keep it in the car with some ice packs and eat between appointments. Saves me at least $2000 a year compared to buying food out.
That's actually a really smart idea! Do you have any tips for foods that work well for car-based meal prepping? I'd be worried about things getting soggy or spoiling throughout the day, especially in summer.
Definitely go for foods that are stable at various temperatures. I keep a good insulated lunch bag with ice packs. Wraps work better than sandwiches because they don't get soggy as quickly. Pasta salads, grain bowls, and hearty salads (hold the dressing until eating time) all work great. I also keep a bunch of shelf-stable snacks in the car - nuts, granola bars, dried fruit, etc. These are perfect for shorter breaks between clients. If you invest in a good thermos, you can also keep soups or hot meals that stay warm for 4-5 hours.
Music teacher here too! Just wanted to mention that while meals between lessons probably aren't deductible, don't forget about other expenses that definitely ARE. I just learned you can deduct: - Streaming service subscriptions IF used mainly for teaching/demonstration - Instrument repairs and maintenance - Sheet music and teaching materials - Portion of home internet if you do any virtual lessons - Professional society memberships - Continuing education Made a big difference on my taxes this year!
Quick tip from someone who was in your shoes last year: be careful with the home office deduction if you're using Form 8829. While it can save you money, it has to be a space used EXCLUSIVELY for business. If you're working from your living room couch or kitchen table, it doesn't qualify. I learned this the hard way after claiming it and then reading more about the requirements. Ended up filing an amended return because I didn't want to risk an audit. But you can still deduct business percentages of internet, phone, and any supplies/equipment you buy specifically for work!
Thanks for the warning! So if I have a desk in my bedroom that I only use for work, but it's in my bedroom where I also sleep, would that area around the desk qualify? Or does the entire room have to be exclusively for business?
The space needs to be exclusively for business, not the entire room necessarily. So if you have a clearly defined area in your bedroom that's used only for work (like a desk and the surrounding area), that specific space can qualify. Take measurements of that dedicated workspace to calculate what percentage of your home it represents. You'll need to be able to prove that area is used exclusively for business if audited. Take photos of your setup, keep records of business activities conducted there, and ensure nothing personal is stored in that specific area. I recommend consulting a tax professional if you're unsure, but many people successfully claim partial room deductions.
Something nobody's mentioned yet - if you're truly self-employed and not misclassified, don't forget you can deduct half of your self-employment tax on your 1040! This is an adjustment to income, so you get this benefit even if you don't itemize deductions. Also look into setting up a SEP IRA or Solo 401k if possible. You can put away a portion of your income tax-deferred, which reduces your taxable income now. The limits are pretty generous compared to regular IRAs.
This is great advice. I started a SEP IRA when I was contracting and it made a huge difference in my tax bill. I think you can contribute something like 20% of your net earnings? Definitely worth looking into.
22 If you're just getting started and making under a few thousand dollars, consider if this actually qualifies as a business or just a hobby in the IRS's eyes. The "hobby loss rule" means you have to show profit in 3 out of 5 years to be considered a legitimate business. If it's classified as a hobby, you can't deduct expenses against other income. Just something to be aware of when deducting expenses from a side gig that's not profitable yet.
11 Wait, so if my candle making business hasn't been profitable yet, I can't deduct ANY of my expenses?? I've spent like $2000 on supplies and only made like $800 in sales so far this year.
22 That's not exactly right. You CAN deduct expenses even if you're not profitable yet. The hobby loss rule doesn't kick in immediately - it's more of a guideline the IRS uses after several years of losses. The key is demonstrating that you have a profit motive and operate in a businesslike manner, even while you're in the startup phase. Keep good records, have a separate business bank account, develop a business plan, market your products, and maintain professional practices. These all help show it's a legitimate business attempt, not just a hobby.
2 Quick tip: if you're selling handmade items, don't forget to deduct the cost of your time as labor when pricing your products! It's not a tax deduction but it's important for making your business actually profitable.
16 That's not actually how tax deductions work for sole proprietors. You can't "deduct" the value of your own labor - you can only deduct actual expenses paid. Though I agree it's important for pricing products correctly!
My accountant told me that this is actually pretty straightforward. It IS income in the year you receive it, despite your intentions. What you do with the money afterward (saving it, spending it, giving it back) doesn't change the fact that it's income when received. But if you're planning to give it back as a gift later, just make sure you stay under the annual gift tax exclusion amount (currently $17,000) when you do give it to her, and you won't have any additional tax implications on that end.
Does it matter if they're tracking it separately in a dedicated account? I've heard that can sometimes make a difference with the IRS if the money is clearly segregated.
Keeping the money in a separate account is good practice and helps demonstrate your intent, but unfortunately it doesn't change the fundamental tax treatment. The IRS generally looks at the nature of the transaction when it occurs, not what you intend to do with the proceeds later. Having a separate account does provide a clear paper trail though, which is always helpful if questions ever arise. It shows you weren't trying to hide anything and had a specific purpose for the funds.
Has anyone considered setting up a 529 college savings plan with this money instead? If your daughter might use it for education in the future, you'd still need to report the rental income BUT the money could grow tax-free if used for education expenses later. Might be a win-win?
Fidel Carson
Just to add on to what others have said, don't forget that with Schedule C you'll also need to pay self-employment tax (which is basically the FICA taxes that would normally be split between you and an employer). It's roughly 15.3% on top of your regular income tax. But the good news is you can deduct half of that self-employment tax on your 1040. Also, since you weren't having taxes withheld, you might get hit with an underpayment penalty unless you made estimated quarterly tax payments throughout the year. Just something to be aware of for next year if you continue freelancing!
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Clay blendedgen
ā¢Oh no, I didn't make any quarterly payments! This is my first time dealing with self-employment. Will the penalty be really bad? And should I start making quarterly payments for this year right away?
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Fidel Carson
ā¢The penalty usually isn't too severe - it's basically an interest charge on what you should have paid earlier. There are some safe harbor rules that might help you avoid it, especially if this is your first year with self-employment income or if your W-2 withholding from any other jobs covers at least 90% of your total tax liability. Yes, for 2025 you should plan on making quarterly estimated payments. The due dates are April 15, June 15, September 15, and January 15 (of the following year). You can use Form 1040-ES to calculate and submit these payments. It's much easier to pay a little each quarter than to be hit with a large bill at tax time!
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Isaiah Sanders
Has anyone used the HR Block online software for filing Schedule C? I'm in a similar boat (1099-MISC for some tutoring work) and wondering if their interface is good for first-timers with self-employment income? Or should I splurge for the paid version of TurboTax?
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Xan Dae
ā¢I used HR Block last year for my Schedule C (freelance writing) and it was ok but not great. The interface was a bit confusing for business expenses. This year I switched to TurboTax Self-Employed and found it more intuitive - it asked better questions to help identify deductions I might have missed. It's more expensive but worth it if you have various expenses to deduct.
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