If you work as a freelance writer, creating content for agencies, companies, and private clients, there are some important tax deductions that you need to be aware of. Freelance writing is not a career that requires a ton of equipment, but that doesn't mean there are not expenses that you can write off at the end of the year that will allow you to save on your taxes.
1. Self-Employment Tax
As a self-employed individual, you have to pay both the employee and the employer side of the self-employment tax. However, when you file your taxes, you can actually write off half of the self-employment tax that you paid. So even though you pay more in self-employment tax as a freelance writer, if you do your taxes correctly, you should be able to deduct that extra amount from your taxes.
2. Home Office Space
If you have a home office space, you can write it off. There are two different ways to write off your home office. You can write off the set amount per square foot allowed by the IRS, or you can individually divide all of your bills based on the percentage of your home that is made up of your home office. For example, if your home office takes up 20% of the square footage of your home, you could write off 20% of your electric bill. You can also write off any bills that are directly related to your home office, such as a dedicated work phone line.
Keep in mind when writing off a home office, you can't use that space for anything else. The space can only be used for work, so an office/guest bedroom technically would not qualify for the home office deduction.
3. Equipment
Next, you can deduct the equipment you invest in for your business, such as a new computer, desk, or printer. You can also write off regular office supplies, such as paper, ink, and other items. Just make sure you keep receipts to track these expenses.
You can also write off subscriptions to magazines, classes you sign up for, and professional development courses that you take that are related to your business as a professional freelance writer.
4. Software
Next, keep track of all the software you use for your business. For example, if you pay for Grammarly, Microsoft Word, or Adobe Acrobat Professional as a monthly subscription or for one-time use, you are going to want to keep track of these expenses.
5. Health Insurance
If you pay for health insurance, you should be able to deduct part of your health insurance costs from your income. This will help off-set the cost of paying for your health insurance on your own.
6. Outside Help
If you contracted anyone for outside work, you will need to provide them with a tax document. You will also be able to deduct the expense of their work from your overall profits or income.
7. Conferences
Finally, if you attend any conferences in order to learn more about the freelance writing trade, or in order to connect with contacts and build your business, the expense of the conference itself, as well as associated expenses of attending the conference, can all be deducted from your taxes.
As a freelance writer, keep in mind that there are plenty of deductions you can take to reduce your tax burden. You can write-off half of the self-employment tax and the money you pay for your health insurance. Things such as your home office, equipment, and software can be deductible as business expenses as well. Don't forget about writing off conferences and any contractors you hire as well. There are lots of ways to save on your taxes; make sure you keep track of these expenses throughout the year.
If you need help with your taxes, you can contact local small business tax planning services.
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