Tax time is one of the worst times of the year for freelancers. There is a strange fluctuation of work at this time, depending on the nature of the freelance work that you do; many freelancers experience either a surge in work or a drought at this time. The former makes it difficult to focus on doing your own taxes. The latter makes you have to work double-time to find work and makes it hard to think about paying out more money if it turns out that you owe the IRS. By the time that you sit down to deal with your taxes, it’s probably late in tax season and you want to just get the whole process over with. At the same time, you don’t want to rush through your taxes and miss some of the great deductions that are available to freelancers.

If it’s that time of year for you and you want to know where to start with your freelance business tax deductions, go through the following checklist to get many of those deductible expenses easily organized:

  • Think of the items that you use daily for your job. Many of these are deductible. Your computer (including software and Internet), pens, postage, packaging and shipping supplies, business phone line, fax costs, business banking fees … anything that you use every single day as part of your business may be a business expense so make yourself a list.
  • Now think of the one-time or irregular expenses that you used in your business in the past year. Books that you bought to learn more about the job that you do, work-related magazine subscriptions, websites that you signed up for to search for jobs, classes that you took for freelancing, networking or association membership fees that relate to your business.
  • Consider your transportation costs. You may work from home but you certainly have to sometimes go somewhere for your job. Maybe you have to do on-site or in-library research, perhaps you attend occasional meetings, maybe you took a trip that you used in your work. All of these may be deductible business expenses.
  • Figure out if you had any work expenses that fall in to the category of business gifts. If you sent out Christmas cards to your clients or if you covered lunch when you met with a new project partner, those might be deductible expenses.
  • Look around at where you work. If you have an office set up in your home, you can actually deduct a portion of your home mortgage and utility costs as part of your freelance business expenses.
  • Finally, look at personal expenses that may be deductible from your business. The biggest one in this area is your health insurance; if you are privately insured, this is deductible from your freelance income.

Tax time can be a hectic time of year for freelancers but it doesn’t have to be stressful. Stay organized, make lists for each of the above categories and set aside a full day of work just to deal with your taxes. Before you know it, the season will be over and you can go on to earning the money that you’ll need to figure out at this time next year!

Any suggestions, ideas? Feel free to comment on this article!

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