What can independent contractors deduct? Accountant Mississauga
If youre an independent contractor, you should be aware of the types of expenses that are tax deductible, so that you can save a bundle come tax time.
As an Accountant in Mississauga, Canada for independent contractors, I elaborate on the many tax deductible expenses that independent contractors can write off, including:
1. Home office expenses
2. Vehicle expenses
5. Computer and software
7. Meals and entertainment
1. Home office expenses for independent contractors Accountant Mississauga
As an independent contractor in Canada, you can deduct expenses related to your home office, such as:
The deductible portion of the above expenses is equal to the percentage that your home office space is of the total size of your home.
2. Vehicle expenses What can independent contractors deduct by Accountant Mississauga
Independent contractors can deduct the expenses related to their car, including:
Tax depreciation (if you own) or lease payments (if you lease)
The car expenses listed above can only be deducted to the extent that they were incurred for business purposes. For example, if you drove 50% for business purposes, then 50% of your car expenses are deductible.
As an Accountant in Mississauga for independent contractors, I encourage my clients to keep a log to track the KMs they have driven for business purposes.
3. Supplies and Tools for independent contractors Accountant Mississauga
What can independent contractors deduct in Canada? Supplies and tools purchased are also tax deductible for independent contractors.
4. Computer and Software
Computer purchases are 100% tax deductible for independent contractors in Canada. Computers include desktop computers, laptops, notebook computers, tablet PCs, as well as computer peripherals (e.g. scanner, printer, etc.).
Software is 100% tax deductible for independent contractors. However, only 50% of the amount can be claimed in the year that the software was purchased, and the remaining 50% can be deducted in the subsequent year.
Travel expenses can be deducted by independent contractors, as long as those expenses were incurred for business purposes. For example, air fare and hotel accommodations to attend a business meeting can be deducted on an independent contractors income tax return. Trips to Disneyland with the family cannot.
6. Meals and Entertainment
As a general rule, independent contracts that spend on meals and entertainment can deduct 50% of those expenses. Note that money spent on personal meals and personal entertainment is non-deductible. However, meals and entertainment expenditures incurred for business purposes, such as meetings with clients, suppliers, and prospects, are 50% deductible.
Make sure to keep your receipts as proof, says Allan Madan, Accountant in Mississauga for independent contractors.
7. General Test What can independent contractors deduct from their taxes?
The general rule that should be applied when evaluating whether an expense is deductible is:
Any expense incurred for the purpose of earning income from business, as long as that expense is reasonable, is deductible, says Allan Madan, Accountant Mississauga for independent contractors.
About the Author Mississauga Accountant for Independent Contractors
Allan Madan is a Chartered Accountant and Tax Expert in the Greater Toronto and Mississauga regions of Canada. Allan has many clients that are independent contractors and regularly helps them with their tax and accounting needs.
To learn more about Allan Madan, see http://madanca.com or what my video at http://madanca.com/what-can-independent-contractors-deduct-in-Canada-accountant-Mississauga