What Freelancers Can Deduct From Their Taxes
If you’re a freelancer, deduction is the name of the tax game: there are many business expenses you can deduct to reduce taxable income in your C (or C-EZ) schedule if you are not registered. If this is your first time filing your self-employment tax return, it costs money to make an appointment with a professional .
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Here are some examples of deductions you can make this year:
Home office deduction
If you work from home, you can deduct a portion of your mortgage or rent if you use the space solely for work. (You cannot deduct a temporary accommodation or hotel room.) For example, if you have a studio or guest room that you use as your “home office,” you can deduct that portion of your mortgage payment if it meets “exclusive and regular use “requirements. This means it was used exclusively for business – you can’t rent it out on Airbnb for a couple of weekends a year, or let your kids use it as an entertainment room – and most of your business must take place there (like billing and administrative work).
You use Form 8829 to calculate the amount of the deduction, and then the amount is entered on Form 1040 (Appendix C). The IRS has some pretty detailed guidance on this finding that you should read if you’re considering. You can also deduct utility bills, rent, repairs and maintenance associated with your business / home office.
Office tools
Pens, paper, computers, software are all deductible if you use it for business purposes, as are other hardware costs depending on the type of work you do. For example, a freelance writer might deduct a magazine subscription.
Travel costs and meals
Airplane tickets, cars and hotel rooms used for business purposes are deductible, as are 50 percent of food and entertainment expenses. Subtract only the business portion of your trip (no vacation days added). If you are traveling to meetings or anything else, you can deduct a fraction of the miles . For 2017, the standard mileage rate is set at 53.5 cents per mile.
Health insurance premiums
You can deduct the cost of health insurance premiums if you are not eligible to participate in health insurance through your employer or spouse.
Professional Development
Career promotion courses are deductible if they are related to your business, as are dues and dues to professional organizations. You can also deduct costs associated with your personal website, including domain, design and maintenance fees.
For more information, check out this guide and the IRS Self Employed Tax Center .