If you are able to be a full-time freelance writer, you are certainly living the dream. You have the opportunity to set your own hours and work in the house instead of a cubicle. It is all really nice until a nightmare happens: tax season. You are not drawing a regular paycheck with its standard deductions. You have to be able to get some deductions from your income or you will be faced with a rather large tax bill.
Deductions are those expenses you are able to legally subtract from your taxable income. You can legitimately deduct the following expenses from your freelancer income:
There are other deductions that you can use but here is a very serious warning. You need to substantiate your business expenses or you will not get a deduction. Section 274(d) of the Internal Revenue Code specifies those expenses that need substantiation. It is well worth your while to know what these are. As a matter fact, keeping hold of any receipts or evidence of business expenses is a very good best practices for your freelancing position.
It helps if you have Quicken or some other software to keep track of your expenses. Make a habit of inputting deductions whenever they occur, and be sure to hold on to the receipts. If you’re at a point where you can be a full-time freelance writer, you should consider getting a professional accountant to do your taxes. These people have to stay on top of tax law and can find the means to help you best reduce your tax liability. That is a lot better than doing this all by yourself and risk facing an IRS field representative because of an accidental mistake. Incidentally, the expenses for that accountant are deductions so it very well may be worth your while tax-wise.
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