Just because freelancers have change and independence does not mean we do not have to worry about the outside world. Even though we have the option of working from home and setting our own hours does not mean we can be late. We still have deadlines, contact customers, and make sure we get paid on time. After all, we have a responsibility to file our taxes and we may not be aware of all the tax deductions we require.
While the tax season can add stress to our already busy plans, it is not all waste and frustration. If you plan ahead and get ready in advance, this time of year can go a long way. And, you might even lower your income by knowing how much you can deduct.
- Office Space
This is a great opportunity for you to become a freelancer and do most of your work from home – whether you own it or rent it. This can be removed by completing Line 30 of Form 1040, Schedule C. Previously this was difficult, but the IRS eased this removal in 2010. According to the IRS, you can take “$ 5 square feet to climb. Up to 300 square feet.” Keep in mind, though, that you do not want to include lines 16, 25, and 27 again. All of these costs go to line 30.
- Office Equipment
You can remove all items for your offices such as pens, paper, books, and printing cartons in line 18. Keep this in mind whenever you buy office supplies as you will need to keep notes so that you can add it all.
- Hardware and Software
What if you use your own laptop, computer, smartphone, or tablet at work too? You may be able to remove those gadgets – as well as hardware that fits your business like a camera. Even services like Netflix and software can be removed as long as you indicate the need to stay relevant in your industry.
- Health insurance
As the IRS puts it, “If you are self-employed, the IRS wants you to be aware of the tax deductions for independent contractors that are usually available to self-employed people.” These deductions may be for any medical, dental, or long-term insurance premiums you have paid. This is only possible if you have been profiting from self-employment. You will usually be able to obtain this waiver on Schedule 1 of Schedule A form 1040.
- Premium insurance
When it comes to insurance, private individuals can also claim insurance premiums such as liability insurance, employee compensation insurance, performance insurance, or insurance that covers you from fire, flood, storm, or theft.
- Transportation costs
If you were to travel for business, such as attending an industrial event or meeting with a customer, you may be eligible to clear fake airports, hotel rooms, rent a car, and even clean up. If you also plan a vacation around your business trip you can simply take parts of the trip that were related to business.
This information would be completed in Line 24A.
If you have purchased advertisements, business cards, brochures, sponsors, or swag with the name of your business, you may deduct this advertising fee from Line 8. Online advertising may be waived.
- Member Fees
If you belong to a charity with your free agency and have to pay membership fees, then this can be waived.
- Internet and Phone Bills
Even if you use your internet or mobile phone plans professionally, you can deduct a portion of this money from your taxes.
- Legal and Professional Services
Have you ever visited a lawyer or hired an accountant this year? You can deduct the cost of these services in Line 17. And, even the person who helped prepare your tax can be reckoned.
If you have taken out a loan to help grow your business, you can do so on Line 16. Credit cards and debit cards can also be added. But, to make ordering easy, you need to have a credit card and one business.
- Transaction costs
Do you get paid through PayPal or does a third party pay a transaction fee? You can add them to the charge together and merge them on Line 27A. If you sell products at sites like Etsy, you can also add that here.
The IRS describes this as “abolishing the property tax which allows the taxpayer to control the price or other of the property. It is an annual permit for the deterioration, deterioration, or malfunction of the property.” This can be a significant reduction for independent survivors using expensive technology such as laptops and cameras.
- Contract Work
If you have hired any other independent contractors or freelancers, such as your website design, the graphic design behind your business cards, or the author of your blog post, then you can include these prices in Line 11.
- Self Employment Tax Deduction
If you are still applying for Form 1040 Program C, you can deduct half of the Social Security and Medicare tax. If you are a freelancing job that is well established, then you may end up considering setting up an LLC as this may reduce the amount of self-employment you deserve.
- Retirement Plan
As a self-employed person, the best option in terms of a retirement plan is SEP IRA. This program is designed specifically for the self-employed and small business owners where you can provide up to $ 53,000 per year. Best of all, every dollar you donate is deducted.
- Professional Development and Education Funding
If you have attended a meeting, enrolled in a class, or participated in a webinar to enhance professional skills the IRS clearly states, “If you are self-employed, you must disclose the cost of your work-based education appropriate form used to report your business and expenses (usually, Program) C (Form 1040), Program C-EZ (Form 1040), or Program F (Form 1040).