3 expenses you should write off in your tax filings

The clock is ticking for Americans to file their taxes by the April 15 deadline, exactly three weeks away. While taxpayers scramble to get their filings together, what are some expenses that are potentially tax deductible?

Macnomics Founder Ross Mac joins Yahoo Finance as part of this week’s Tax Time: From Rates to Refunds special, breaking down the best tax advice for people who have yet to file.

Catch more of Yahoo Finance’s Tax Time: From Rates to Refunds here, or watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: The tax man cometh. Tax season is well underway. In fact, you have a little less than a month left until that April 15 deadline to file your 2023 taxes.

So we want to get some tips for all the late filers that are out there. Yes, if you’re filing right now, you would probably be considered late. Joining me now to help simplify your finances is Macnomics founder and personal finance expert Ross Mac.

Ross, great to see you. Let’s start with those self-employed folks that are out there. What should they be writing off in their taxes?

ROSS MAC: Brad, thanks for having me. When it comes to self-employed individuals, you got to understand, there are a number write offs that are qualified that the government allows you to write off.

First things first, your start up and your operational costs. It costs in order to start your business, as well as you got to understand that everybody lived through the COVID lockdown. Well guess what, many people, most entrepreneurs, actually, live in their home. And guess what, they have a home office. So you have that home office deduction.

You also have marketing costs. You have travel costs, vehicle expenses. But I would, obviously, say, consult with a qualified CPA.

BRAD SMITH: I’m going to ask that CPA. If I can count me cooking for me, as a personal chef, a live-in chef, I don’t know. I might have to pay myself for my services.

Once our viewers though file their taxes, if they do receive a refund, what should they do with the money?

ROSS MAC: I love that question. I think one, you got to first understand, a tax refund isn’t just a magical bonus the government gave you. In fact, it was your money that you were just paying too much to the government the prior year.

But when it comes to this question, the very first thing I always want you to do is make sure you don’t have any bad debt. And what I mean by that is that 20 plus percent APR credit card that you have. Secondly after that, assuming you don’t have any credit card debt, the next thing I want you to do is ensure that you have a fully funded emergency fund.

And then thirdly, I would recommend starting to invest. And when it comes to investing, you could ask Warren Buffett, you could ask myself, I think the very first investment a person should have is one that is the most diversified, that being index funds, S&P 500, NASDAQ, et cetera.

BRAD SMITH: And with that investment mindset as well, what is the time horizon that you typically tell folks to consider?

ROSS MAC: The idea is when you buy an asset, you want to be holding it for five-plus years, because you got to take into account your timing. One of the greatest things they say is you can’t time the market. Instead, you want to focus on time in the market.

So when you’re buying an asset, you’re looking to be a long-term holder. So I look at it for five-plus years. When I buy an asset, I’m trying to hold it until I’m getting ready to retire.

BRAD SMITH: Ross Mac, thanks so much. Appreciate it.

ROSS MAC: Thank you.

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