For example, you will also have to pay taxes on self-employment (Social Security and Medicare) and possibly other necessary taxes. And if you're self-employed, you have to file estimated taxes quarterly, so it's always recommended to consult a trusted accountant. Self-employment tax can be a frustrating expense for small business owners. If you are considered a sole proprietor or independent contractor, you will have to pay this tax.
Basically, this tax means that you pay both the employee and the employer for your Social Security and Medicare. This cost amounts to 15.3% of your income. The good news is that part of the self-employment tax is deductible, about half of it. This is because the IRS considers the employer's portion of the tax to be a business expense.
If you have an accountant, they can explain exactly how much and will adjust the amount accordingly on your tax return. As long as you meet the requirements, the IRS allows you to put landscaping as a tax-deductible business. Keep in mind that your name must be listed as the owner of the business, as well as the owner of the property for which the income is intended. For most homeowners, despite adding value to their property, lawn care is not tax-deductible.
While your tax specialist can help you understand if your gardening costs can be calculated, the general rule is that if the expenses go to a business or income, they are more likely to be useful when filing taxes. In addition to income tax, a person who has a gardening business will also have to pay self-employment tax. In addition to daily deductions related to your vehicle, you can also include repairs and maintenance on your tax return. In other words, even if you have a lawn care business that takes you to other people's gardens, you should have at least one room in your house that you can call a home office.
However, to offset some tax burdens, self-employed people have many tax deductions to reduce their tax bills. If you own a property that you make money with, then it is a business and therefore lawn care, repairs and maintenance can be charged because they are necessary to keep the property in its original state. If you work as a landscaper or gardener, offering your service to others, the IRS will see you as the owner of a self-employed business that is subject to income tax. As a result, the tax deductions you'll receive can be spread over the total number of years you expect the lawnmower to last.
Since you are self-employed as a gardener or landscaper, you must pay self-employment tax in addition to income tax. TurboTax Self-Employed will ask you simple questions about your life and help you fill out all the right forms. It's important to carefully track each expense and keep receipts to receive full benefits when filing your taxes. If you make changes to prevent property depreciation, you can file them under special depreciation or section 179 depreciation of your taxes.
It's important to familiarize yourself with the rules for reporting company income and the types of tax deductions available.