How to Reduce Your Taxes As a Contractor

Instructions
Things You'll Need:
Tax guide, such as J.K. Lasser's Tax Manual
Form Schedule C instructions
Reducing Taxes
1
Take stock of all of the expenses that you incur as a contractor. This includes vehicle expenses, office equipment and supplies, utilities, home office expenses and overhead and just about any other expense that you incur in your business activities.
2
Check to see if each type of expense that you incur is deductible by consulting either the instructions for Schedule C or a guide such as J.K. Lasser's Tax Manual. Regular commuting expenses are usually nondeductible, unless you are driving to more than one work site per day. In that case, certain rules and restrictions apply.
3
Familiarize yourself with the tax rules so you can take maximum advantage of them. If office overhead is killing you, consider moving your office into your home and deducting a portion of your home expenses as business expenditures.
4
Keep a detailed list of your expenses and store the receipts for your expenses and make copies of them to submit with your tax return. If the IRS ever audits your return, then those will serve as proof for the IRS.