Write-offs for business expenses will help offset your self-employed income. iStockphoto By Kimberly Lankford, Contributing Editor January 2017 QI retired from my job early in 2016 and then did some part-time consulting work for my old company. I was paid a few thousand dollars as an independent contractor. What tax forms do I need to file, and what can I deduct?SEE ALSO: Most-Overlooked Tax Breaks for the Self-Employed AYou should receive a Form 1099-MISC from your old employer by the end of January reporting your self-employed income for 2016. You’ll need to report that income on a Schedule C accompanying your tax return. You may be able to use the shorter Schedule C-EZ if your business expenses do not exceed $5,000, you have no employees and you don’t claim a home-office deduction (see below). If your net earnings are more than $400, you’ll also need to file Schedule SE to figure your Social Security and Medicare taxes. The good news for you as an independent contractor is that you can deduct many of your business expenses -- such as the cost of a computer, printer and other equipment you use in your work, plus the cost of work-related phone calls and mailings, office supplies, duplicating, advertising and business travel. You can also deduct legal and professional fees for your business, books and publications you purchase for your business, and the cost to rent an office space (or you may qualify for the home-office deduction if you work regularly and exclusively in your home). Half of the Social Security and Medicare taxes you pay is also deductible. Also on the list of write-offs: your health insurance premiums, if you aren’t eligible for health insurance from an employer or your spouse’s employer. If you’re on Medicare, you can deduct the premiums you pay for Medicare Part B and Part D, plus the cost of medigap or a Medicare Advantage plan. This deduction shows up on your Form 1040, not the Schedule C, and is available whether or not you itemize deductions. You can’t deduct more than the net income of your business. Advertisement SEE ALSO: Self-Employed? Avoid These Audit Red Flags on Your Tax Return See IRS Publication 535 Business Expenses for more information about tax-deductible business expenses. Also see Most Overlooked Tax Breaks for the Self-Employed. Independent contractors can deduct the cost of a home office if they use part of their home regularly and exclusively for a freelance business. See the IRS’s home-office deduction factsheet and Publication 587 Business Use of Your Home for more information. If you qualify, you have two options for taking the deduction: You can use the simplified option, which lets you deduct $5 for every square foot in your home that qualifies for the deduction (up to a maximum write-off of $1,500). Or you can use the regular method, which is based on your actual expenses, deducting a portion of your mortgage interest or rent, utilities, property taxes, homeowners insurance and other expenses based on the percentage of your home you use for your work. For example, if your home office is one-fifth of the square footage of your home, you can deduct 20% of those expenses. You’ll also be able to deduct the full cost of certain direct expenses for your home office, such as the cost of maintenance and repairs to that part of your home. See IRS Form 8829 Expenses for Business Use of Your Home for more information. Self-employed people can make tax-deductible contributions to a solo 401(k) or Simplified Employee Pension based on their self-employed income. It’s too late to open a solo 401(k) for 2016 (you needed to open the account by December 31 but have until April 18, 2017, to make contributions if you already have an account). But you still have time to open and contribute to a SEP, which is similar to an IRA and offered by many brokerage firms, banks and mutual fund companies. See How Self-Employed Workers Can Save for Retirement to help calculate how much you can set aside in either plan. SEE ALSO: 23 Most-Overlooked Tax Deductions If you will continue earning income as an independent contractor in 2017, you may need to file quarterly estimated tax payments. The first payment is due April 18, 2017 (see IRS Form 1040-ES for the form, worksheet and address where you should send the form; you need to send it separately from your tax return). Quarterly payments are also due by June 15, September 15 and January 15. For more information about the tax obligations and breaks for people with freelance or other self-employed income, see Self-Employed Individuals Tax Center and see IRS Publication 334 Tax Guide for Small Business. Got a question? Ask Kim at email@example.com.