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The Bunching Deductions Technique for Self-Employed and Small Business Owners


The standard deductions have nearly doubled from what they used to be, making it harder to itemize for self-employed taxpayers. The 2019 deductions are: $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly.


Self-employed taxpayers who do not have enough deductions to surpass these thresholds then take the standard deduction.


Understanding your deductions, and how they best suit your tax needs is especially important for the self-employed, and small business owner, due to the nature of business and personal tax deductions. These numbers help determine accurate profit and losses and ensure you are receiving your best tax return.


Types of deductions all self-employed small business owners should consider:


  • Advertising costs including printing business cards and brochures

  • Car and truck expenses

  • Salaries and wages

  • Contract Labor

  • Office Supplies

  • Depreciation of Equipment or Vehicles

  • Rent on business property

  • Home Office and Utility Expenses

  • Gifts to Clients

  • Meals bought for business entertainment


Ken Moraif, certified financial planner at Retirement Planners of America, recommends the “bunching” deductions technique to exceed the standard thresholds, if possible. Bunching is when you time expenses into the current or next year based on the best tax return strategy for your business. This can be accomplished by pushing deductible expenses into the same calendar year, like charitable donations; or by moving certain deductions forward, like pre-paying January’s rent payment.

In this example, doubling charitable contributions in one year (with additional itemized business deductions) may allow a person to be over this standard deduction and see more benefit itemizing in their income tax return. This is a tax strategy that many seasoned tax professionals will be aware of, and work with you to ensure your best possible return is met within tax guidelines.

Other than charitable donations, people may accelerate tax deductions similarly by paying property tax bills early or taking a look at larger medical bills. These can also be beneficial when itemized using the “bunching” method.


According to the IRS, there were 26,426,406 self-employed non-farm sole proprietors who filed taxes for the 2017 year, with a whopping total of $69,547,029 deductions filed among these. So do not be shy about claiming deductions- you deserve them!


Contact us for more information, or to schedule your free consultation. Let us help you with all your questions about deductions and other self employed tax services.


Michael Morris

Paragon Tax Professional


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