Ah, tax season is upon us yet again. And if you’re a freelancer with an LLC, they’re due soon (March 15, to be exact). Personal taxes are due on April 15 for everyone else.
Here’s a handy checklist of little-known tax deductions you might be able to write off! Disclaimer—most of these items are up for only a partial deduction, but still. Let's get into it!
Please note, we are NOT professional tax people. We highly recommend that you find a licensed CPA and run our suggestions by them to see if they apply to you.
1. Home Expenses
If your home is your office, then it’s likely that you can write off anything you’ve updated in your home that enhances your workspace.
- Entire Home Office Deduction—If your home is your chief place of work, you may qualify for this type of deduction. Check out this article to see if this policy applies to you. You may also be able to include partial rent, home insurance, utilities, mortgage interest, repairs, and more, as a deduction based on the square footage of your home office!
- Parking Spots—If you live in a crowded area where you have to pay for a parking spot or garage, you might be able to write this off.
- Car Expenses—If your car is chiefly used for business purposes (like transporting equipment or travel to clients), you may be eligible for write-offs of expenses such as gas, repairs, mileage, and more.
- Internet & Phone Expenses—If you work from home, you can likely deduct some of these communication expenses from your taxes.
- Storage Space Rent—If you’re someone with an online store, or too much/bulky work equipment that requires off-site storage.
- Medical, Dental, and Vision Expenses—This one’s highly dependent upon your circumstances, so check in with your tax pro and see if any of your expenses may be deducted. Check out this article to get a quick understanding of these rules.
2. Work Expenses
These types of expenses might already be on your list, but you might not know how deep this list can go!
- Materials & Supplies—Not just for paper and pencils! Consider the bigger things you’ve upgraded this year, like file storage, drivers, electronics, printer supplies, and more.
- Repairs—If your office items need repair, include those expenses in your write-off.
- Furniture—From a new ergonomic chair to that standing desk, to that filing cabinet, or recently purchased office space furniture. If you bought an item this year to improve your workspace, ask your tax professional if you can write it off.
- Rentals—Anything you need to rent to do your job may qualify for a write-off.
- Subscriptions—Any subscriptions you use to enhance your work or use to entertain clients are worth looking into for deductions. Website portfolio hosting and domain fees for your online business also apply!
- Advertising Fees—If you paid for ads, business cards, hosted events, or outside help like PR specialists to improve your business or attract new clients.
- Meals & Entertainment—Have you treated yourself or clients to full meals at restaurants, while on location, or spent money on team-building events? These are types of deductions you may partially write off. Note: lavish gifts and spendy bottle service do not apply here.
- Union Dues—Depending on your state of residence, union dues might be applicable.
- Studio Rent—If you have an off-site place of work, like a studio or office, all rent, utilities, supplies, and maintenance fees typically apply for a tax write-off.
3. Education Expenses
Consider all the education you pay for to improve your career.
- Educational Subscriptions—If you pay for services like Masterclass, Skillshare, or similar platforms to enhance your job-related skills.
- Educational Tuition—If you are enrolled in a local or online university to advance your career. Pop-up classes and event fees may also qualify if they are directly related to your field.
- Institutional Memberships and Dues—For example, you’re an illustrator studying figure drawing and you pay for a membership at a local studio.
- Conventions And Industry Event Fees—Networking is important, but it can also be expensive. Thankfully you can likely write off these event costs (and, yes, travel-related expenses would also apply here!).
- Materials Acquired for these educational forays might also be included, especially if it’s likely you’ll continue to use the materials for your career beyond the classes. An example of an appropriate write-off: you need a new tablet for the design class and will also use it exclusively for your work as a designer in your field.
4. Travel Expenses
Whether you’re traveling for work or research, you may be able to write off a business trip from this past year, including these details…
- Airfare for a trip that’s entirely work-related.
- Rental Car, Fares & Fees to help you get around while on the job. This includes car fare for any rideshare you hire while working.
- Lodging Expenses for your business trip.
- Meals & Entertainment, whether you’re entertaining yourself or clients while on location.
- Shipment Fees of your baggage or equipment for job-related travel.
- Rentals of any equipment you might need while on location.
- Other Fees like laundry and dry cleaning expenses may also apply! If you paid for something necessary to complete your job, you might be entitled to a write-off.
5. Self-Employment Taxes
Freelancers have to pay a self-employment tax for Social Security and Medicare. Thankfully you can write off a part of this tax. Try this calculator to see how much you might be entitled to write off!
6. Miscellaneous Expenses
- Hiring Others—If you frequently hire other freelancers or contractors for their help in improving your business.
- Legal Fees—If you hire a lawyer, accountant, or related consultant in regards to business matters.
- Start-up costs—If you started your new business this year, you might be able to deduct up to $5,000.
- Retirement Contributions—One big item you can likely write off is your annual retirement contributions—so be sure to contribute before your taxes are due! There are limits to how much you contribute, so check with your state’s laws and consult a CPA.
- Business Insurance—Not everyone pays for business insurance for liabilities, permits, materials, and more, but if this applies to you, look into writing it off.
- Business Interest Expenses—If there is interest accrued on business accounts (only), credit cards, loans, and more.
General Tips For Freelance Bookkeeping
- Invest In Bookkeeping Software—As you can see from the above list of tax deductions for freelancers, it pays to invest in bookkeeping software throughout the year. Apps like Wave and Quickbooks can easily help you keep track of your spending while also giving you a clearer picture of your annual income—key items you’ll need for filing your taxes.
- Have A Separate Business Account—We also recommend keeping your personal and business accounts separated. Opening a business account and having a strictly business credit card for all your purchases are two ways you can ensure you’re organized come tax season. Wherever your personal and business duties collide (like in your home office, for example), that’s where it pays to...
- Hire A Licensed CPA—For quicker filing, reliable answers, and advice, find a local CPA who specializes in freelance tax preparation.
