Another big category is health insurance. Self-employed people may be able to deduct premiums for themselves and family members as long as they weren’t eligible for employer-sponsored coverage (even through a spouse).
Some gray areas
A variety of deductions tend to confuse taxpayers because the rules are more nuanced or are seemingly subject to interpretation. And when taxpayers envision a potential audit, they “rationalize their expenses as if they are going to be talking to an elementary school assistant principal,” Mr. Garafolo added. “And they don’t realize they will be talking to a homicide detective.”
Which tax breaks trip up filers most often? If you have a work-related lunch with a client, for example, you can generally deduct half of the bill, as long as the meal is “reasonable based on the facts and circumstances” and not “lavish or extravagant.” But you can’t write off a round of golf with a customer.
Another tricky situation arises when mixing vacation with business travel. If you have a single speaking gig during a weeklong vacation, you can’t deduct the plane tickets. But if you tacked on a couple of days to do business, you can deduct your hotel, rental car and half of your meals for those two days. Plane tickets are deductible when the primary purpose of the trip is work related.
Transportation expenses — say, a 20-mile drive to meet customers — may also be deductible and can be accounted for in a couple of ways. For driving, you can generally either take the standard mileage deduction or actual expenses to operate the vehicle (lease payments, insurance, gas, oil) based on the ratio of business to personal use. Track and document both, then claim the larger deduction.
Contributions to tax-advantaged individual retirement accounts like traditional I.R.A.s and Simplified Employee Pension, or SEP, I.R.A.s may also be deductible. SEPs are often the better choice because self-employed people can contribute far more than with a traditional I.R.A., said Dina Pyron, a partner at Ernst & Young overseeing the firm’s EY TaxChat filing service.
An added bonus
Many self-employed people may be eligible for a tax break enacted as part of the 2017 tax law. It allows those with so-called pass-through entities — that is, their business income passes through to their personal return — to deduct up to 20 percent of qualified business income.