Freelancer write-offs to maximize your tax savings

On the other hand, itemizing deductions lowers your adjusted gross income (AGI). You’ll need to keep records of everything you’re itemizing as proof for the IRS. Records are things like medical bills, car-related receipts or insurance bills.

Let’s say you work as a freelance photographer, and have to drive to shoot locations or meet clients for consultations. Since you’re using your car for business-related purposes, you can take this as a deduction. Or you work as a delivery driver for Grubhub. You need your car to make the deliveries, a phone to help you navigate to your location, a work uniform and insulated bags to keep the food hot or cold. Everything from the car miles and cell phone to the insulated bags is counted as business expenses, eligible for tax write-offs. Home office deduction One of the most popular business expenses is the home office deduction. If you work from home and have your own dedicated office space, you’ll be able to apply for this deduction. You must use your home office exclusively for your business, and you can even deduct a percentage of your utility bills, rent and phone costs. Plus you must use the home office regularly. If you’re a gamer and stream from your home office or coach other gamers, your gig is eligible for a home office deduction. Coaching clients virtually with your coaching business can also qualify for the deduction since you need your home office space, computer, headset and microphone to help your clients. But if you work from your home office and are a W-2 employee, you won’t qualify for the home office deduction. Premiums for health insurance Some health or medical expenses are deductible, but not many people are actually eligible for the deductions. You’ll need to itemize the tax write-offs, and you’ll only get a deduction if your expenses exceed 7.5% of your adjusted gross income. The good news for anyone self-employed is you can write off your health insurance premiums, including long-term care coverage and dental). But to count this as one of your business expenses, you must have no other health insurance coverage, meaning your spouse can’t have the option at their workplace, and you have business income. Business meals You can deduct business meals, like meals at a restaurant or coffee from a coffee shop, as business expenses as long as you’re actually discussing business over the meal. There also needs to be a business associate present at the meal. A business associate could be a client, potential client, business partner, agent, advisor or investor. If the meal seems too extravagant, the IRS may raise an eyebrow at the expense counting as a business meal. For the 2023 tax year, business meals are 50% tax deductible. This includes take-out but it doesn’t include groceries or snacks. Sharing a sushi dinner with your spouse, who also happens to be your business partner, and discussing business during the meal would count as a deduction. If you collaborate with other influences over a coffee who will help you with some promotional side of your business, this also counts as a write-off. Let’s say you run a wedding photography business. If you meet with potential clients over pastries and tea to discuss pricing, venue and event details, this qualifies as a business meal. There are a lot of other self-employment tax deductions. Here’s a glimpse at the tax-deductible expenses list:

It is important that you take advantage of every tax deduction you can as a self-employed individual and lower your self-employment tax bill. You can do this easily by keeping thorough record of all your expenses, saving receipts and invoices throughout the year. And using tax tools, like a You can also use an app like estimated taxes calculator. You can also use an app like FlyFin to do all the work for you and make tax season stress-free.