As someone who gets their income through a business in lawn care, you may also be eligible to get tax deductions for landscapers. After all, you will likely have a lot of expensive gear to buy and business-related expenses to handle.
With that in mind, what are the tax deductions that you are eligible for as a landscaper? What can you do in order to make your tax-keeping easier? Do you get tax money back when you buy business equipment? Well, read on to figure out what tax deductions you may take advantage of.
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Do I Need to Pay Self-Employment Tax As a Landscaper?
If you work as a landscaper or gardener, offering your service to other people, then the IRS will see you as a self-employed business owner who is subjected to income tax. This means that you will need to report your income and your tax deductions when you file for tax return.
Besides the income tax, a person who has a landscaping business will also have to pay self-employment tax. This will include taxes that will go into your Social Security and Medicare.
A total of 15.3% is going to the self-employment tax. 12.4% of that tax will go to Social Security, whereas the other 2.9% will go into Medicare. Bear in mind that you will have to pay quarterly estimated taxes throughout the tax year, by the due dates set by the IRS.
Try our free tool to calculate how much you'll owe in self-employment taxes.
Can I Deduct Landscaping On My Taxes?
As long as you meet the qualification, the IRS allows you to put landscaping as a tax-deductible business. Bear in mind that your name needs to figure as the business owner, as well as the owner of the property where the income goes to.
If you are a renter, then you may not be able to deduct the costs of landscaping, no matter if you pay for the lawn care costs or not. This is because the IRS deems it a capital investment.
Small business owners working from home but meeting the clients at their houses may be eligible for tax returns. They may deduct a portion of the total costs, depending on how much of their property is used as a business.
In other words, even if you have a lawn care business that takes you into the gardens of other people, you must have at least a room in your house you can call your "home office." That home office may contain everything from your paperwork to your landscaping gear.
What Can I Write Off As a Landscaper?
Like every small business that a self-employed person may have, a landscaping business will also give you the opportunity for tax deductions. If you are into lawn care, here are the tax deductions that you may write off when tax time comes strolling
- Lawn mowers and the gas needed for it
- Business license fees
- Legal and professional services (as well as other start up fees)
- Lawn equipment that might be needed for your small business
- Safety gear necessary for your landscaping business
- Internet, phone, and any potential data plans needed to keep your small business running
- Mileage driven by the business owner for business-related purposes (try our free mileage template)
- Vehicle maintenance or expenses needed for repairs
- Services and electronics that your truck may need, along with the cost to repair them
- Items for vehicle maintenance, such as paper towels, window cleaners, etc.
- Home office supplies, such as paper, pens, and envelopes (use our worksheet for home office expenses)
- Postage fees for invoices
- Marketing expenses that the small business owners need to go through in order to advertise their lawn care company
- Insurance expenses connected to your lawn care business
- Miscellaneous items that can help you do your job as a lawn care business owner
Landscaping tax affects everyone differently, which is why you may want to collaborate closely with the IRS and your tax advisor. Whatever tax deduction you may have to write off, they can help you with your tax return.
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Can You Write Off the Lawn Mower On Your Taxes?
The lawn mower is tax-deductible, so yes, you can get tax deductions on it. To put it simply, everything that small business owners use for the purpose of the company may be written off. You just have to prove that you are using the lawn mower for your landscaping business, and you should be able to write off the purchase price taxes.
It is mandatory to keep the records of every purchase that you make for your business. It's very easy to lose track of expenses, even the ones necessary to keep the lawn mower running - i.e., the gas. In the event of an audit, you must have a way to prove your expenses.
The lawn mower in itself is considered a "capital expense for your business. As a result, the tax deductions that you will receive may be spread over the total years in which you expect the lawn mower to last.
To make a simple example, the average $5,000 lawn mower lasts somewhere around 5 years, if used continuously for the business. Multiplying $5,000 by 20%, you get $1,000 - and that's exactly how much you can claim every year for the next five years.
Tax Tips for Landscapers
Tax deductions for landscapers may be given to anyone owning a landscaping business. All you need to do is keep a record of your expenses when you file for tax return.
The tax law is set - and as long as you meet the requirements, you can get your deductions. With that in mind, here are some tips that you'll want to keep in mind if you want to get the most out of your tax return.
Depreciate Your Costs
It might be tempting for you to claim one-time tax deductions for business equipment. However, if you want to save on your taxes, you might want to try the depreciation method instead.
Take an essential piece of equipment, and depreciate its cost over the past couple of years. You might receive more out of that depreciation when you get your tax return.
Check With Your State Laws
Depending on the state that you live in, you may or may not be subjected to sales taxes when offering your services.
Check with your state laws and make sure that you are handling your expenses and taxes correctly. The last thing you want is to have the IRS at your doorstep.
Calculate Vehicle Travel Expenses Correctly
When you are deducting the travel expenses for your truck, you may want to be careful of the calculations - specifically, the cents per mile rate. The IRS mileage rate for businesses is 56 cents per mile. You may also use the truck expenses options provided by the IRS. Read our article on claiming the Standard mileage deduction versus actual expenses.
Know What You Can't Deduct
As a landscaper, there are certain expenses you may not get a deduction for at the end of the tax year. For example, while you may be able to deduct equipment, you may not be able to deduct an expense that was already reimbursed to you by the person who hired you.
The Bottom Line
Owning a lawn care business is a good way to generate income if you like gardening. However, just like the rest of the self-employed people that get their money through offering services, you'll also need to pay taxes. Hopefully, this guide gave you some ideas on how to handle your tax return.
