Top Tax Deductions That US Freelancers Often Overlook
As a freelancer, doing everything on your own can become a burden during the tax season, when you must put in extra work to clear your returns. Not every freelancer understands better the need to keep their bookkeeping intact, leading to various difficulties while preparing for the tax season. One major concern you must address as a freelancer is that you might miss potential tax deductions.
Hiring accounting and tax services in Charlotte, NC from a reputed accounting firm will let you stay updated on the rules and the possible tax deductions you are eligible for in the first place. Keep reading as we present the top tax deductions you can avail of as a US freelancer.
Home Office or Workspace Deduction
If you are a freelancer operating your business from home, you can deduct a part of the home rent or mortgage payment. You must designate a room or apartment space for home office purposes to qualify for this particular deduction. The deduction here is calculated based on the measurements of the home office space. A percentage of the mortgage payment or monthly rent can also be deducted.
Utilities
Freelance business owners can consider utility bills as an expense for their home office or business location. The utility percentage deducted for the home office areas should be proportional to personal and business usage.
Phone
As a freelancer, you may have to use your phone for both personal and work purposes. The phone bill can be considered a business expense, and a portion of it can be deducted during the tax season.
Internet Services
Internet services used by freelancers for business purposes are eligible for a tax deduction as they are considered utility or office expenses. However, if the service is also used for personal use, freelancers can deduct only a portion of the total bill.
Office Supplies
Deductions can account for the cost of investing in office supplies for business purposes. For example, pens, paper, print ink cartridges, and staplers can be accounted for by submitting a proper purchase bill for valid tax deductions.
Business-Related Equipment And Technology Purchase
Investing in larger items like a computer can also be deductible if said to be purchased to run your business operations as a freelancer. When you intend to buy an expensive item, the entire purchase price can be claimed at once or spread into parts over several years as depreciation. Considering future expenses, if your business income and tax bill remain higher, it would be worth spreading the deduction over time.
Business Travel Expenses
If you are a freelancer who needs to travel or go on business trips to meet with your business operations or services, then travel expenses like hotel rooms, flights, meals, and car rentals can be deducted. You need to be traveling for business purposes, either to see a client, attend an industry conference, or attend other events related to your business, to deduct the travel expenses.
Marketing and Advertising
Expenses related to marketing and advertising your business can be tax deductible. Many marketing and advertising activities, including web, print, radio ads, TV, public relations, promotional materials, direct marketing, promotional events, and more, are eligible for a deduction.
Conclusion
With constant tax changes, freelancers must stay updated on their eligible deductions yearly. Since freelancers work independently, news about crucial deductions can get lost in the barrage of paperwork. Seek professional tax services to understand your expense records better and to find deductions that your business is eligible for in the first place. Hiring such services will let you rightly estimate your taxes and uncover every possible deductible business expense.