Deductions for IT Consultants

One of the advantages of being an independent IT consultant is that you can deduct expenses. This doesn't make purchases free, it just means you don't have to pay income tax on the amount of income equivalent to the expenses. In effect, this means that everything that you buy that is a valid expense is essentially purchased at a 30% (approx.) discount.

So what can you expense? The rule of thumb is that you can expense any task that is required to generate income or has the potential to generate income. Here's a good list to consider:

  • Conference fees
  • Course costs if related to the work you do
  • Banking fees for business accounts
  • Business and technical books
  • Home office expenses (this one is complicated so do some research)
  • Business phone costs include a cellphone used for business
  • Accountant and attorney fees
  • Membership fees for associations related to your line of work
  • Subscriptions to business and professional magazines and journals
  • Food and entertainment for clients (50%)
  • Business insurance premiums
  • Commutings costs
  • Postage, Fedex, UPS shipping charges
  • Office supplies such as paper, printer ink, toner, letterhead, business cards
  • Internet access fees
  • Web hosting fees
  • Software and hardware you buy for use in your business

Sometimes you can deduct expenses even if you're working with a recruiter. This isn't always the case, but it's certainly worth asking.

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