Tax credits that the self-employed need to know about!
Being self-employed has many perks. You get to work on what you want, when you want. There is no one to tell you you’re late to work, what you can and can’t wear, and when you can or can’t take vacation. It’s pretty good life. One of the best parts? You get an extra month and half to file your taxes – due on June 15, unlike everyone else who had to file them by April 30.
But, the tax deadline is fast approaching for you self-employed Canadians, so don’t forget to claim the tax credits that you are entitled too. Here are some of the most commonly overlooked credits that many self-employed individuals make.
Home Sweet Home Credit
One of the most common overlooked deductions are home expenses. If you have a home office that is your principal place of business, you can claim a portion of your home expenses (for example, insurance, property tax, mortgage interest, and utilities). Pretty good perk of being self-employed, we’d say!
The amount you can claim depends on the percentage of the total square footage of your home that is used for your home office. For example, let’s say your home has four rooms and one of them is your office. That’s 25% of costs that you can claim! However, if you do not use the office exclusively for business, you’ll have to further reduce it by the percentage of time you use it for personal use. A tax expert would be the best person to help you figure out that math.
Driving all the way to the bank
Have a vehicle you use for your business? There is a tax credit for that, too.
Similar to your home, you need to keep track of how much your vehicle (if it is also your personal vehicle) is used for business purposes. The best way to do this is to keep a detailed log book documenting kilometers driven for personal and business purposes. When you determine the percentage of distance you drove your car for business use, you can claim that percentage of the car’s expenses for the year.
Within your auto expense, you’ll be able to claim:
Who said not to sweat the small things?
Often the most overlooked tax credits can be the things we tend to forget about; things like coffee meeting with clients so make sure you keep your receipts.
You might be thinking it’s just one coffee, but multiple clients and multiple coffees add up fast. Each expense may be small but can greatly impact your tax refund. Other charges to keep in mind include:
Travelling like a boss
That’s right, you can claim travel expenses if it was for business purposes! Like any other business expense, it must have been for a business purpose and you must prove that the travel was required for business (such as a receipt to a workshop or conference attended).
Remember, you’re able to include flights, ground transportation, hotels and possibly meals.
So, for all you entrepreneurial Canadians, now that you know there’s all these credits you can claim, what are you waiting for? Make sure you file by the June 15th deadline – and file correctly – to ensure you have peace of mind to go about your life and your business without unnecessary headaches down the line.
A Tax Expert at H&R Block can help answer any questions around filing your personal tax return as a self-employed Canadian.