Freelancing is becoming famous to earn a living. A freelancer works from home set his/her rates, pick clients and set his/her working hours. While enjoying plenty of benefits, there are some shocks for freelancers, such as tax season. Freelancers are liable to pay a dreaded tax on self-employment. If you are an employed person, the employer will pay extra tax and have the right to treat you as an employee. There is no need to worry because you can get the advantage of tax deductions as a freelancer. You may access lots of deductions like certain sections of the home, business meals, and office supplies.
If you want to understand tax laws of your state, you have to hire a tax preparer or accountant. Some freelancers are unware of these deductions, and they pay more taxes on their income. By known some common tax deductions, you can increase your savings and decrease your expenses.
Web Hosting and Domain Costs
Some freelancers work internationally so they must have a website. This website can connect them with other people in the world. Websites can’t be a simple option because you will need hosting services and domain costs. These may vary between $120 and $140 in a year for one domain. These are the business expenditures essential to deduct in other expenses in 1040. If you get a personal website, you can host it under the similar account. If you have some sites or expensive web hosting, you may save some cash on taxes by claiming this deduction.
Web hosting and domains are useful without net access. Numerous modern freelancers do their job through their internet. You may deduct these bills from taxes but consider a caveat. You can only claim these expenses for the time that is used for business purposes. With strict working hours, you can quickly calculate these expenses.
Sometimes, you may not know when a client contacts you. Sometimes, you have to work in late hours. If you don’t have fix working time, you can claim the whole internet amount. You must talk to your operator to see the best strategy as per your working situations.
Meals of Business
As per the type of your freelancing business, you may have to organize conferences, networking meetings, and trade shows. Sometimes, you have to take your customers to some exceptional restaurants. Several meals are deductible even when you didn’t get a job. It is difficult to prove your business meals. You must keep receipts of meals that you want to deduct. If possible, write down names of people who were with you in the dinner. Keeping the track of meals for auditing purpose is important.
Online Services and Apps
You will need online services and apps like Buzzsumo, Dropbox or Skype. If you are paying fees for them, you can add them for deductions. These charges are deductible if they are essential for your business. Costs of an online service or app are utterly allowable from taxes under “other expenses.” If you are paying only a few bucks for services like Evernote, you can add up this amount for possible benefits.
You can claim the cost of computer upgrades and computers for tax deductions. A computer for business use can be a great reason to decrease your taxes. Freelancers can note these deductions because it is effortless to justify these expenses in your business expenses. If you have an expensive computer or more than one computers, you can communicate with a tax preparer to understand the value of depreciation.
You may miss deductions of advertising fees, but it is a crucial expense to deduct from your taxes. PPC ads along with other advertising like sign advertising, radio and television are deductible. You can treat them as tax deductions as a freelancer. The investment of PPC can be variable, but you have to track it carefully.
Moreover, you can deduct office supplies, such as expensive ink cartridges. These supplies are essential to use for business objectives. These deductions apply to office desks, chairs and other furniture. If you are working without dedicating an office area, you can deduct the cost of particular office furniture.