How it works: The standard IRS deduction rate is 56 cents per mile of use. Vehicle deductionsĪt a glance: Do you use a vehicle for your job? Whether you’re driving to client meetings, vetting a new vendor out of town, or traveling for a freelance article, you can deduct business-related mileage from your gross business income. Keep in mind: You may not be able to use this deduction if you have an LLC or C-Corp. If you’re self-employed, you’re responsible for the entire cost-but you can deduct the employer portion from your business income. How it works: Normally, employment taxes (those that cover Social Security and Medicare) are split between an employer and employee. Write off your self-employment taxesĪt a glance: Another great self-employed tax deduction comes from writing off half of your self-employment taxes, which are 15.3% of net earnings. Our trusted tax attorneys at Gordon Law Group can help with this! 3. With an accountant’s help, you may be able to subtract home insurance costs, repairs, and even depreciation costs from your taxable bottom line.
See our blog post How Long to Keep Tax Records (and What to Keep) for more information. Be sure to save records documenting the square footage of your home, the square footage of your home office, and all costs that you’re deducting. Keep in mind: Since the home office deduction for freelancers is often misused, it’s one of the top triggers for a tax audit.
If your office space takes up 10% of your home, for example, then you can deduct 10% of your rent or mortgage, internet bill, and other utility costs. The deduction is based on the percentage of your home or apartment that the dedicated office space takes up. How it works: Your home office must be a dedicated area (a bedroom with a desk doesn’t count). Keep in mind: To use the QBI deduction, your total income (not just income from self-employment) must not exceed $164,900 for individual filers or $329,800 for joint filers.Īt a glance: Yes! You can deduct home office expenses, including rent and associated utilities, from your taxable income. Sole proprietorship is the default category for businesses-of-one that aren’t formally registered. You might be running a qualifying business without even realizing it, allowing you to use this super-charged tax deduction. This provision allows sole proprietorships and other types of companies with pass-through income to deduct 20% off their yearly earnings automatically. How it works: One of the best self-employed tax deductions available is the 20% pass-through provision enacted in 2018. 20% Qualified Business Income (QBI) DeductionĪt a glance: Qualifying freelancers and small business owners can automatically deduct 20% of qualified business income from their taxable income. Read our post To Itemize or Not to Itemize? for more information. Note: Most of the deductions on this list are itemized deductions. Here are the top 10 tax deductions for freelancers and self-employed workers. If you’re not taking advantage of these deductions, you may be leaving thousands of dollars on the table each year!
There are many self-employed tax deductions available for freelancers, independent contractors, and small business owners.
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