7 Tax Deductions All Freelancers Need to Know About
The freelance life can be a great one. You make your own hours. You can work from wherever you want. You can walk your dog on your lunch break. Those parts are all great. What’s not great is when it’s tax season and you have a bunch of 1099s sitting in a pile, staring at you menacingly. Until the IRS catches up with the growing population of freelancers and gig-economy workers (Lyft, TaskRabbit, etc.), paying taxes is going to a be kind of painful, but way less painful if you know what to write off, how to keep track of your expenses and bonus points if you do your taxes quarterly.
Freelancers Union is a great resource and community for freelancers looking for advice on everything from taxes to tough clients, so we’ve pored through their site to find all of those little expenses you may be overlooking when you’re filling out your deductions for the year. Seeing as taxes can get really, really complicated for the self-employed, it may make sense to hire an accountant or try software like Freshbooks to help you out, but before you do, take notes on all of these possible deductions and gather up those receipts.
1. Your Workspace: If you work from home or from a studio, you can write off that space, but here’s the catch: If you work at your kitchen table, but you also use your kitchen table for anything else, you can’t write it off. If you only use it occasionally, you can’t write it off. The space has to be used for work only and often. The IRS is a stickler about personal space deductions. So keep it honest and keep it documented.
It’s a kind of a complicated process to claim your home workspace, but it can be worth it. You can take a deduction of up to $1,500 for a home office! You can also write off utilities if you have an office or studio that’s not in your home. Get all of the nitty gritty details here.
2. Contract Work: Did you hire someone to help you design your website or run some business errands for you? You can write off the money you paid any business-related contract workers (not permanent employees). And yes, that includes accountants, so keep your receipt if you’re paying someone to help you out this year.
3. Self Promotion: So you got a fancy new website last year complete with new business cards. Yes, you can write that stuff off on your taxes. If you have an Etsy shop and print little cards to stick in your packages or even put up flyers in your local coffee shop for your business, you can write off those expenses too. There are apps like Shoeboxed to help you keep track of your receipts throughout the year, or you can bank with a company like Simple that makes it easy to take notes on all of your purchases.
4. Supplies: Everything from postage and pens to materials you use to DIY the stuff you sell in your Etsy shop — if it’s a material you use for your business, you can write it off. Sure, a pack of pens seems like a small expense, but that stuff adds up.
5. Events / Classes: Did you take a class or go to a conference to amp up the skills you need for your business? From a class to your ticket to ReMake, you can write off learning and networking opportunities
6. Travel: Itemize your business miles that you drove last year and even parking fees, gas and repairs. Transit rider? That counts too! Just keep track of your mileage and all of your necessary receipts, then fill out the proper forms.
If you go on a work-exclusive trip, you can write off a portion of your flight and accommodations. Super important: This is another one that the IRS is super picky about, so make sure you note it separately from your everyday travel expenses on your tax forms. Also, be sure to keep it honest. Like, if you’re a floral designer who flew to San Francisco to deck out a wedding, but extended your trip to hit up your favorite makers, make sure you don’t add those days to your deduction. More on that here.
7. Gadgets: This one can be complicated, but we all spend money on laptops, cameras, hard drives and such, so take notes. Usually, you’ll write off these expensive gadgets as depreciations, writing off less and less each year for five years after you purchase it. You can also write off any repairs, so maybe that will make your next trip to the Genius Bar a little less painful. Get the full details on that right here.
Ready to tackle your taxes? Get a line-by-line rundown of how to fill out all of these deductions over at Freelancers Union. When you’re all done, start happy hour early! (You can do that because you’re your own boss.)
How do you prep for tax season all year? Let us know your freelancing tips in the comments!