Question

g Tax advantages of being self-employed (rather than being an employee) include: a.Job-related expenses are deductions for AGI. b.The self-employment tax is lower than the Social Security tax. c.The overall limitation (50%) on meals does not apply. d.An office in the home deduction (for AGI) is available. e.Both "An office in the home deduction (for AGI) is available" and "Job-related expenses are deductions for AGI" are advantages.

Answer 1

Answer:

The correct answer is letter "A": Job-related expenses are deductions for AGI.

Explanation:

There are several tax benefits self-employed have but, in general, job-related expenses can be deducted from their Adjusted Gross Income (AGI). You can deduct half of your self-employed tax paid in Medicare and Social Security from your income. Essentially, the IRS treats the employer's share of the employment tax as a business expense and allows for an appropriate deduction.

Home office deductions may be complex. The cost of any work base used regularly and exclusively for business can also be the cost of the home office. This includes expenses on utilities, too.