Work for Yourself
For many Americans, business ownership has become a path to financial freedom. Home-based business owners can deduct things like a home office, telephone, internet service and office supplies. When you start a business, the initial deductions may offer tax refunds, and as the business begins to make money, the continuing deductions lower your taxable income. Thanks to the latest tax reforms, starting your own business makes even more financial sense. Not only can you deduct normal business expenses like the equipment you use for your business, and portions of the facilities and utilities, but you can also claim an automatic 20 percent deduction on all business income. Yup, if you are a sole proprietorship, a partnership or even an S corporation, you can claim this whopper of a deduction starting in the 2018 tax year [source: IRS].
There are some limits and exclusions to this 20-percent deduction (this is the IRS, of course). Your business can't make more than $157,500 for individual filers or $315,000 if married and filing jointly. And certain professions can't claim it, including doctors, lawyers and accountants [source: Mercado].
Just make sure you can prove to the IRS that you really have a business and are not just trying to write off expenses. If your side business never shows a profit even after several years, the IRS might flag you for an audit.