As the end of the year approaches, it's time to turn your thoughts toward taxes. More specifically, you need to have an idea of what tax deductions you can take. As a freelance writer, my expenses are fairly low, but there are still some tax deductions that I take each year. As you begin toting up how you can offset your home business income with tax deductible expenses, here are a few things to keep in mind:
These days freelance writing is a very online kind of job. And that means that you need high speed Internet in order to make money. You can deduct your Internet costs. To do so, you probably need to first figure up how much of your household's Internet use is for your business. My freelance writing business accounts for about 85% of our household Internet use. As a result, I can deduct 85% of the cost of the Internet in our home. I can't deduct the portion that isn't used for my business, though.
Office Supplies and Equipment
If you make purchases of office supplies, you can deduct that from your freelance writing income. The same is true of office equipment. The printer/scanner/fax machine that I bought for my home office is tax deductible, as is the chair I sit on and the pens I use. Even my computer is tax deductible. (Find out from a tax professional whether or not it makes sense for you to use the depreciation method when deducting certain items like computers and printers.)
When you travel for business, you can deduct many of your expenses. If you drive, there's a deduction based on the miles that you traveled. If you fly, you can deduct airfare. You can also deduct hotels and ground transportation, as well as a portion of your meals. As long as you are traveling for a legitimate business purpose, you can take these deductions. You can travel for business meetings, conferences in your field, and to trade shows. Since I am a professional blogger, attending conferences like the New Media Expo, and the FINCON makes sense for me, and I can deduct related costs — including the conference registration costs.
Other Freelance Writing Tax Deductions
You can take other deductions as well, so long as they are related to your business. You can deduct the cost of trade publications, as well as for cell phone costs related to your business. It's possible to deduct advertising costs for your business, and the cost of web development. I recently had professional photos taken for my business, and that counts as a tax deduction as well.
It's important to be careful, though. Make sure that you are truly engaging in business activities when you decide to deduct them. And remember that deductions can only be taken for things that are used exclusively for your business. Yes, you can take a deduction for your home office, but if you are using part of the room for storage, you can't deduct the entire room; only the area that is used exclusively for your business is eligible (for me that means the 5 x 8 area that encompasses my desk and other office equipment).
Don't forget that you can take tax deductions as freelance writer. Look over your expenses, and see what you might be able to use to reduce your income.
Photo: Tax Credits