Quick Guide to Tax Deductions for Freelancers

You can save hundreds or even thousands of dollars by claiming tax deductions. Each claim that you make takes money away from your total income amount. So, you owe less in taxes and may get some of your quarterly payments back.

Tax deductions are crucial for any and all freelancers to understand. But, tax deductions for freelancers are different than standard tax deductions. So, many freelancers get lost when it comes to claiming the right things.

To learn more about self-employed freelancer taxes and freelancer tax deductions, keep reading. We’ll cover everything you need to know.

What Are Freelancer Tax Deductions?

Tax deductions account for all of the payments that you make for your freelancing business. As the old saying goes, you have to spend money to make money. 

Tax-deductible expenses for freelancers account for these inevitable expenses. And, because you’re spending that money on a business, you get to pull those expenses off of your total income before you pay taxes. So, you’ll be paying less in taxes overall.

Freelancer tax deductions are different than standard deductions that you may have had as a typical employee. So, you could get several deductions on top of one another.

Tax Deductions for Freelancers

The things that you can deduct for taxes freelance will depend on the type of business that you have.

For example, a fashion YouTuber may be able to write off for fancy clothes, while a freelance accountant can’t. However, there are some standard tax-deductible expenses for freelancers such as a computer, a phone, and other essentials.

Home Office

Most freelancers work from home in some capacity, so it’s common for freelancers to deduct office supplies. Everything that you use for your business counts, including a portion of the rent and utilities for your home.

There is only one catch.

The space that you’re designating as your office must serve that purpose solely. You can’t claim another room in the house as your office space from 9 AM to 5 PM and deduct everything in that room. You have to have a designated office space in order to deduct items from that space.

Business Equipment

If your business expenses include any equipment or supplies, you can deduct those expenses from your total income before taxes. Just as with other expenses, anything you deduct has to be necessary for your business to run.

This also applies to any materials or other items that you need in order to run your business. 

To make it easier on yourself (and avoid problems with the IRS), you should keep your personal and business expenses separate. You should open a separate bank account and use separate debit and credit cards. This will make it easier for you to distinguish different types of expenses.

Plus, keeping things separate will make it easier to locate and claim deductions at the end of the year. You won’t have to shuffle through mixed bank statements and try to remember what each purchase was.

To learn more about the IRS and how they sift through tax deductions, go here for more information.

Traveling

If your business requires you to travel, you can deduct the expenses. However, you have to prove that you used these trips as a means of developing your business. Hence, you can’t deduct personal trips as business expenses.

Travel expenses do not include everyday travel to your office space (if you work outside of the home). 

These kinds of deductions may include traveling to a national conference, seeing colleagues from out of town, meeting with prospective clients, or similar tasks that require traveling from your usual area.

Meals

Meals that relate to your business are deductible at 50%. Again, these meals have to be business expenses to count as write-offs.

For example, you may host a business dinner for colleagues or meet with prospective clients over lunch. These expenses would count as freelancer tax deductions.

Education

If you invest in any education for you or your employees, this could be a freelancer tax deduction.

Classes that help you get certifications in your field or grow your business knowledge count as tax deductions. Even fees that you have to pay for certification and licensing count for deductions.

However, as with other tax deductions, these expenses must be directly related to your business. You can’t deduct education that’s unrelated to your business, even if it’s to help you train for another career.

Examples of Tax Deductions

There are several tax deductions that you can claim as a freelancer. Because there are so many different kinds of freelancing positions, the kinds of things that you can deduct seem endless.

A carpenter is going to deduct an entirely different set of things than a model. An accountant isn’t going to make the same claims as a YouTuber.

No matter what your freelancing position is, you should get the most out of the deductions that you take. Here is a list of 20 deductions that you should consider claiming if you’re a freelancer:

  1. Self-employment tax deduction
  2. Health insurance premiums
  3. Home office deduction
  4. Car mileage
  5. Hardware
  6. Software
  7. Retirement contributions
  8. Advertising expenses
  9. Marketing expenses
  10. Membership due
  11. Internet expenses
  12. Phone expenses
  13. Transaction fees
  14. Web hosting costs
  15. Contract labor
  16. Business loan interest
  17. Credit card interest
  18. Business insurance
  19. Startup costs
  20. License fees

We could go on and on, but this is a great place to start if you’re trying to figure out what you need to deduct for taxes freelance this year.

When in doubt, talk to a certified accountant. They can help you determine whether or not specific expenses are deductible for your job title.

Learn More About Self-Employed Freelancer Taxes

When it comes to tax deductions for freelancers, there’s a lot to learn. In fact, you may learn more over time with experience. Then, you’ll be wishing that you made certain claims the first time around.

The best thing that you can do right now is to keep researching. The more that you learn about freelancer tax deductions, the more money you can get back on your taxes at the end of the year.

To keep learning, check out the rest of our blog.

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