The income you receive from consulting is considered normal income, and you'll need to add it to any other income you earned during the year. This means that you'll be paying taxes on the total amount at your marginal tax rate, which is based on what you earned. Fortunately, consultants are likely to have deductible business expenses that can help you save a lot on your taxes. To make sure you're taking advantage of all the deductions you're entitled to, it's a good idea to create a checklist.
Here are some of the main tax deductions for consultants:
- Travel expenses
- Office supplies
- Advertising and marketing costs
- Insurance premiums
- Professional fees
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