Practically speaking, that means you can deduct some of your property taxes, utility bills and other bills as business expenses, based on the square feet of your home office. You have to use the room exclusively and regularly for it to be a legitimate independent contractor deduction. A dedicated room in your home, or garage, that you use as a principal place of business is allowed. Working from your bedroom or in the living room doesn't count. You have to use a portion of your home exclusively for business to take home office deductions as an independent contractor. Ask yourself the simple question when it comes to membership dues, 'Would other people in my line of work deduct these dues?' If the answer is no, then don't take the deduction. As ridiculous as that example may seem, many independent contractor take deductions along those lines, and end up raising red flags. You won't be able to deduct dues paid to the Soap Guild, even though making soaps is your hobby, and you have big plans for turning it into a small business venture some day. For example, if you're a lawyer working as an independent contractor, then the membership dues you pay to the American Bar Association will qualify. You have to prove that it's an 'ordinary and necessary' expense, for the deduction to be valid. If you belong to a trade organization in your industry, you can deduct the dues. The following are legal and typical deductions you can take for business expenses as an independent contractor:

Don't invite the Internal Revenue Service (IRS) to audit you unnecessarily. Not taking the deductions, or taking the wrong ones, are common mistakes made by some independent contractors. You need to know the independent contractor deductions for business expenses, to reduce your tax liability and to take advantage of tax credits.

Idependent contractor expenses