Did you know there are 10 powerful Schedule C strategies that could significantly reduce your tax bill this year? From employing your spouse or child to maximizing home office deductions, these techniques can help you:

• Deduct family medical expenses through a Section 105 plan

• Turn everyday costs (like utilities and insurance) into business deductions

• Legally lower your self-employment taxes

Schedule C taxpayers often miss out on these opportunities — don’t let that be you!

Let’s review your business finances now to make sure you’re getting every deduction you deserve.

10 Smart Schedule C Tax Strategies for Sole Proprietors

Filing your Schedule C (Form 1040) as a sole proprietor can be overwhelming, but with the right strategies, you can maximize deductions, reduce your taxable income, and keep more of what you earn. Below, we explore 10 powerful tax strategies that every small business owner should consider.

1. Deduct Health Insurance Premiums with a Section 105 Plan

By hiring your spouse as an employee, you can reimburse them for family medical expenses. This turns those reimbursements into fully deductible business expenses under employee welfare benefits. It’s a smart way to convert personal medical costs into business deductions.

2. Employ Your Child for Tax Savings

Hiring your children shifts income from your higher tax bracket to their lower (or even zero) bracket. Children under 18 employed in a sole proprietorship are exempt from FICA taxes, and each can earn up to the standard deduction amount tax-free.

3. Employ Your Spouse for Medical Reimbursement

Instead of paying wages, reimburse your spouse for medical expenses. This reduces FICA tax and allows you to claim these reimbursements as business deductions, effectively lowering your taxable income.

4. Rent from Your Spouse

Own an office or business asset? Rent it from your spouse to move income from Schedule C (self-employment tax) to Schedule E (no self-employment tax). This simple shift can result in significant tax savings.

5. Maximize Home Office Deductions

Your home office can turn personal expenses (utilities, insurance, depreciation) into business deductions. Even if you have another office, your home office can still qualify as your principal place of business, converting commuting miles into deductible business mileage.

6. Utilize De Minimis Fringe Benefits

Small gifts like flowers, fruit, or books to yourself or employees can be deducted as fringe benefits while remaining tax-free to the recipient.

7. Vehicle Expense Optimization

Using a heavy vehicle (6,000 lbs. or more) in combination with a qualifying home office can yield quick deductions and transform commuting miles into deductible business miles.

8. Deduct Domestic Travel Expenses

Business trips within the U.S. can be fully deductible if the majority of your trip days are for business. Transportation, meals, and lodging on business days qualify for deduction.

9. Claim Foreign Travel Deductions

Traveling abroad for business? If your trip is under seven days, you may deduct 100% of your transportation costs, even if you worked only one day during the trip. Meals and lodging for business days are also deductible.

10. Deduct Cell Phone Expenses

Smartphones used primarily for business can be fully reimbursed by your business—even for personal use—when treated as a working condition fringe benefit. Sole proprietors may deduct the business-use percentage and depreciate or expense the device.

Final Thoughts

Maximizing your Schedule C deductions is about strategy, structure, and compliance. From employing family members to turning travel and phone expenses into tax benefits, each move can significantly lower your tax bill.

Consult a qualified tax advisor to ensure these strategies fit your unique situation and remain IRS-compliant.

As a sole proprietor or single-member LLC owner, you may be leaving thousands of dollars in tax savings on the table. Here are a few strategies from the latest Schedule C tax planning guide:

• Hire your children and shift income to a lower tax bracket

• Deduct a portion of your home as a business expense

• Turn business-related travel into fully deductible trips
  
  

Each of these methods is IRS-approved and designed to help you keep more of what you earn.

Want to explore which strategies fit your situation? Book a time with us today!

If you file a Schedule C, you have unique opportunities to lower your tax burden — but only if you act early. Our new guide outlines strategies including:

• Renting from your spouse to reduce self-employment taxes

• Claiming your smartphone as a deductible business expense

• Maximizing your vehicle and travel deductions

Each of these strategies is simple to implement when planned properly.