Taxes
Being self-employed offers you more freedom and control over your professional life. It also means more complicated taxes. So it makes sense to take advantage of these self-employed deductions to lower your tax bill.
How do I write off my motor vehicle expenses?
The average Canadian drives quite a bit each year. This is often the case with the self-employed, too. You're constantly driving to see clients, scouting locations, picking up supplies or visiting the bank. That driving comes at a cost to you. That's why you should remember to claim your motor vehicle expenses on your taxes. The CRA breaks these costs into two deductible categories: costs for using the vehicle and costs for purchasing your vehicle. You may not be eligible for Capital Cost Allowance every year. But, you can likely claim the costs of using your personal vehicle every year. Thus, follow the rules on how to calculate your motor vehicle expenses for taxes.
How much can you save for a home office deduction?
If you have a home office, you may be able to deduct some of those costs on your taxes. If you're self-employed, your space will qualify if:
- Your home office your principal place of business
- Or you use the space only for business on a consistent basis.
If you qualify, this could be a large write-off. It potentially includes costs for heat, water, rent, property taxes, insurance and even mortgage interest. To calculate your home office deduction, determine the size of your office as a percentage of your home's size. Apply that percentage to your home expenses to come up with your deduction. For example, if your home office is 10 percent of your home by square footage and you spent $20,000 on your home, your deduction could be worth $2,000. If you use the home office for business and personal reasons, you can only deduct the business part.
