Common Tax Deductions for Freelancers

If you are a freelancer (or self-employed) with your own small business there are numerous tax deductions that you will want to be aware of. Why? Well, a tax deduction reduces the amount of taxable income you’ll have when you file your taxes. Here is a look at some of the most common tax deductions for freelancers:

Home Office Space Deduction

If you work from home you are entitled to write off your dedicated work space. You can write off a percentage of your mortgage or rent in relation to the size of the space that you use to conduct your business. A portion of your homeowners or renters insurance is also a deduction.

Percentage of Bills

If you are using your home to conduct your business, a percentage of your utilities, phone and internet can be deducted. If you have a dedicated fax and phone line for your business, that is also a business write off.

Technology Expenses

Most everyone who is self-employed and runs their own business today uses some type of technology to do so. You can write off any technology purchases you make and use to conduct your business including computer equipment, computer upgrades, fax machines, internet routers, printers, web cameras, zip drives and the list goes on. Any computer software you use for your business is also deductible.

Office Supplies

This includes purchase you made on everything from your desk, filing cabinets, desk chairs to paper, pens, paper clips or any other supplies you use to conduct your business. Envelopes and the cost of postage are also tax deductions.

Business Related Expenses

This includes everything from business cards and letter head to copyright and incorporation fees.

Education, Training and Subscriptions Fees

This can be a large array of items including seminar fees, workshop fees or any other type of educational course fee related to your business. Educational magazine subscriptions, other subscription fees for anything related to your business, professional affiliation or association fees are all considered tax deductible.

On-Line Fees

If you have a website, you can deduct the cost of your domain name(s) and web hosting fees.

Travel Expenses

Any time you travel for your business there are numerous tax deductions. These include transportation expenses like parking fees, mileage, airfare, taxis, buses and trains. Other travel deductions include hotel rooms, office space rental, meals on the road and even your cleaning or laundry expenses while traveling. Some of your travel expenses will be 100% deductible while others will only be 50% deductible – consult with a tax professional if you are unsure.

Everything Else

Other expenses you can write off include your health insurance (if you are paying for it through your business), annual credit card fees paid to a credit card used for business purposes, unpaid client invoices and fees from collecting money like Paypal or bank fees. If you rent a post office box or safe deposit box for your business those fees are also deductible. Tax software and tax preparation fees are deductible as well. Finally, client related expenses like the cost of a business lunch or gifts given to clients are also tax deductible.

As you can see, if you are self-employed there are numerous tax deductions you need to be aware of. In order for you not to miss anything it will be important to carefully keep track of all of your expenditures throughout the year. Always make sure to document and keep receipts for all of your expenses. A great tool to do this with is something like a QuickBooks Online.

This article is provided for Backtaxeshelp.com, a site designed to help you with IRS back taxes. Owing back taxes to the IRS is stressful, and negligence will only worsen the situation. Learn how to pay back taxes.



Last Edited: February 3, 2012 @ 3:34 pm The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. I’m hoping when we buy a home I can have a spot for a dedicated office! Thanks for the list.

  2. PT, that’s an awesome list! The tax code is so convoluted that a lot of people are probably missing out on legitimate deductions like these.