Freelance work has its benefits. There’s no nine to five, you have the ability to work from home and you can take lunch whenever you’d like. As good as being a freelancer can be, having to file your taxes can be an absolute nightmare for most freelancers. Fortunately, I know a thing or two about this burden. Read on to learn 6 surprising tax deductions that every freelancer should know.
1. The Home Office
Most freelancers work out of their homes, giving birth to the term “The Home Office”. Realizing this, the IRS allows freelancers to deduct a portion of their rent or mortgage to pay for the home office!
In order to use this deduction, the freelancer must have a certain area in their home and only use it as a home office. In other words, your living room couch will not technically qualify as a home office. You can determine your deduction’s value by calculating the percentage of square footage designated as office space and apply that percentage to household expenses.
2. Hotel and Travel Expense
Isn’t traveling for work fun? Good news: As a freelancer, you can deduct travel and accommodation costs for work! Heck, you can even deduct up to 50% for meal expenses. Attending that trade show wasn’t a bad idea after all.
3. Professional Development
We can both agree that it’s always a good idea to improve your professional skills. That’s how you stand out from the crowd. The IRS also shares our beliefs and chances are you’ll be qualified for this tax deduction.
You are able to deduct expenses related to professional development when filing your taxes. Additionally, you can deduct the membership fees from joining professional development groups. It appears that the IRS wants to encourage freelancers to invest in themselves.
4. Website
Gone are the days of taking out an ad in the yellow pages to market your business. Today most freelancers use a website. So it should come as no surprise that the IRS allows you to deduct costs associated with your website including maintenance, design and building costs. Next time you look to retool your website, choose to invest in your business because chances are, you can write it off.
5. Advertising
With the onset of social media and with most people owning smartphones, essentially putting a computer in people’s pockets, it’s no secret that investing in online and mobile advertising can help freelancers gain more business. Fortunately, freelancers are allowed to deduct advertising and marketing when filing their taxes. This includes business cards, flyers and web advertising.
6. Computer Software
These days most freelancers use a computer in some fashion for work. If you are a freelancer that has to buy a software for work (designers buying Adobe, writers buying Microsoft) then it’s useful to know that the IRS allows you to deduct computer software that you use for business. This is good to know as most software tends to be expensive. My best advice is to consult a professional accountant, as accountants know all the tax deductions everyone forgets.
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