Can a self-employed person deduct their own salary on taxes? Is paying myself a tax write-off?

Oh that makes more sense! So it's not something I can just start doing right away as a sole proprietor? I've just been filing a Schedule C with my personal taxes. Would it be worth looking into changing my business structure at my income level? Or should I wait until I'm making more money?

You're correct that as a sole proprietor filing Schedule C, you can't deduct "paying yourself" - that's just your profit. At $22,000, I wouldn't recommend changing your business structure yet. The general rule of thumb is that S-Corp tax savings usually start making sense when your business profits are consistently above $40,000-50,000. Below that, the costs of maintaining the corporation (annual fees, additional tax preparation costs, payroll processing) can outweigh the benefits. Focus on legitimate business deductions instead - supplies, venue costs, reference materials, even a portion of your home if you use it regularly and exclusively for business purposes.

Does this actually work for small operations? I do some freelance graphic design but only made like $15K last year. Would this be overkill for someone like me or actually helpful?

I'm skeptical about tax software being able to find deductions that standard software like TurboTax wouldn't catch. What specific deductions did it help you find that you hadn't known about before?

For someone making $15K from freelancing, it's definitely not overkill - actually that's when finding every possible legitimate deduction matters most! The tool works regardless of business size and specializes in finding deductions specific to your particular field. What made it different from TurboTax was that it specifically analyzed my industry (content creation) and found deductions unique to my situation. For example, it identified that portions of my streaming subscriptions, my smartphone data plan, and even some clothing items I'd purchased for recording sessions were legitimate business expenses. It also helped properly calculate my home office deduction which I'd been too scared to take because I was worried about triggering an audit. The best part was that it explained WHY each deduction was legitimate with references to specific tax code sections.

Wait, I've never heard of this before. How does it actually work? Do they just call the IRS for you? I don't understand how they could get you through faster than you could yourself.

This sounds too good to be true. The IRS is notoriously impossible to reach. I find it hard to believe any service could get through when millions of people can't. Seems like a waste of money to me.

They don't just call for you - they use an automated system that navigates the IRS phone tree and waits on hold, then alerts you when an agent is about to pick up so you can take the call. It's like having a robot wait on hold instead of you. I was extremely skeptical too! I had tried calling at different times of day, different days of the week, and just kept hitting walls. The way their system works is they have technology that stays on hold and navigates the phone tree for you. When they're about to connect to a human agent, they call your phone and connect you. It's simple but genius. I didn't believe it would work either but after wasting so many hours, the time saved was absolutely worth it. I was literally able to continue working on other things while their system waited on hold instead of me losing an entire day.

Thanks for the suggestions! I do track most of those already, but I didn't think about deducting part of my internet for online sessions (I do about half in-person, half online). Would I just calculate what percentage of my total internet usage is for business?

Yes, exactly! You'd determine what percentage of your internet use is for business purposes. If you're using it for online D&D sessions regularly, you can estimate the percentage. For example, if you use your internet about 50% of the time for business, you can deduct 50% of your internet bill as a business expense. Just make sure you keep good records of your online sessions (dates, times, payment receipts) so you can justify the business use percentage if ever questioned. And remember, it needs to be regular and ongoing use, not just occasional. With half your sessions being online, that's definitely a legitimate business expense!

The key to avoiding the hobby loss rule is showing that you're running your D&D sessions as a business with the intent to make a profit. Keep good records, have separate business accounts, track all expenses properly, create a business plan, and be professional about how you operate. The IRS generally uses a "3 out of 5" guideline - if you show a profit in 3 out of 5 consecutive years, they typically consider it a legitimate business. Since OP mentioned they were "hit hard with taxes," it sounds like they're profitable, which helps their case significantly.

That makes sense, thanks! I've been profitable 2 of the last 3 years, so I think I'm on the right track. I do have separate tracking for all my game master income and expenses, but I should probably open a dedicated bank account to make it even clearer.