Tax Deductions That Freelancers May Claim (2024)

If you’re self-employed, a gig worker, or the owner of a business, you’ve probably struggled with the onerous task of filing your self-employment taxes and thought about how to maximize your savings.

The good news is that the IRS allows sole proprietors, small company owners, LLCs, and self-employed individuals to claim deductions for anything that is deemed “ordinary and essential” to run their enterprises and a 1099 calculator helps everyone calculate theirs.. This implies that you can deduct any costs you incur for specific goods or services necessary to keep your firm operating from your taxable income.

There is a caveat though since not all freelancers are able to claim the same set of deductions, according to the IRS. since there are often distinct deductions associated with each type of freelancing.

Here, we’ve compiled a list of some of the most popular tax deductions for freelancers that are accessible to those who work for themselves:

Car/Mileage

If you own a vehicle and use it for work-related reasons as a self-employed person, independent contractor, or freelancer, you can write off the business miles and any related costs. One of the most beneficial tax deductions for many self-employed individuals is mileage.

The mileage tax deduction may often be claimed in one of two ways:

Utilize the standard mileage rate to multiply the number of business miles you’ve traveled (58.5 cents in 2022). Gasoline, depreciation, repairs, and upkeep are all included in this sum.

The true costs of running your automobile may be tracked using the actual expenses method. Gas, oil, tires, repairs, insurance, tolls, parking, garage fees, registration fees, leasing payments, and depreciation permits all qualify as qualified costs for this use.

Education

The following requirements must be satisfied in order to qualify for the deduction, according to the IRS, in order to deduct educational costs from your taxes:

• To preserve or advance your business’s talents, education must be helpful.
• For status/certification maintenance, education must be mandated by law.
• The training you received must be applicable to your present line of work.

Additionally, you can deduct all of your admissible costs for work-related education with the use of tax deductions for education, including:

1. Both fees and tuition
2. Lodging and boarding
3. Transportation
4. Distance learning
5. Subscriptions
6. Internet fees
7. Reading and typing
8. College Loan

If you work for yourself, you can write off your eligible work-related costs for education directly from your income for self-employment. This includes things like student loans, tuition, other fees, transportation costs, etc. Lifetime Learning Credit, Coverdell Education Savings Account, and American Opportunity Credit are a few examples of student loan costs.

In-home office

One of the best benefits of working as a freelancer is having a flexible office and the ability to work from home. You might take advantage of significant tax savings by having a home office.

You must consistently utilize a portion of your house entirely for conducting business in order to qualify for the deduction. Furthermore, you need to show that your house serves as your main place of business.

The home office deduction enables you to deduct costs for things like mortgage interest, rent, utilities, property taxes, upkeep, furniture, equipment, cleaning supplies, and more.

Travel & Meals for Business

When you travel for business, including for hotel, food, Wi-Fi, shipping, and dry cleaning, you can deduct these costs from your taxes as an independent contractor, freelancer, or business owner.

If you want to claim business travel expenses as a tax deduction, your trip must be:

• Principally commercial
• An “usual and required” cost
• A long way from your “tax home”

In a similar vein, you are able to write off the cost of business meals. An official business dinner, according to the IRS, consists of food and drinks given to a client, consultant, or other types of business contact who is a present or future consumer.

Utilities If you work from home, you can partially deduct your utility costs if you are a self-employed person. The whole cost of the utilities might be written off if you happen to have rented office space for your company.

One of the major tax breaks offered to independent contractors is the ability to deduct their rent. You can write off the costs for each rental property you own as a freelancer. In other words, you may write off whatever rent you pay for an apartment, workplace, or warehouse.

Market Research & Advertising

As a freelancer, you are able to write off any regular and required company costs, including those related to marketing and promotion, like:

• Newspapers, television, the internet, cable, and magazines all feature advertising.
• Commercial endeavors
• Costs associated with advertising and marketing
• Utilizing the Internet
• Making promotional products
• Expenses related to promoting events
• Telephone and internet

Any business needs to spend money on its internet and cell phone plans, and if you use both often for work, you may be able to deduct those costs. If you use a different business mobile phone or internet connection, you can write off the whole expense. The portion used for business can be written off if you don’t have a dedicated line.

Subscribers & Members

You may be able to write off these expenses as a freelancer if you belong to a professional association or a networking group, or you purchase business or trade periodicals that are intended to support your firm.

You may deduct the cost of your magazine, newspaper, journal, newsletter, and other subscriptions.

Charge Card Interest

When using a credit card for personal expenses, interest is treated as a personal cost; however, when using a credit card for business purposes, things are different. Your debt must be connected to your trade or commercial activity in order for the interest on your credit card debt to become deductible.

Supplies for an office

A deductible cost is one that includes any tools or materials you use to do your work. All office supplies and equipment are included in this.

A Business Loan

The interest you pay on a company loan is deductible as a business cost. To qualify for a company loan, the IRS often imposes the following conditions:

• For the loan, you must be held accountable in court.
• You must firmly resolve to repay the obligation, and both you and the lender must agree on this.
• A creditor-debtor, or borrower-lender, relationship exists between you and the lender.

Fundraising Activities

If you decide to itemize your taxes on Schedule A on Form 1040, charitable gifts may lower your tax liability. Contributions to eligible charities are required in order to be tax deductible. There is never a tax deduction for donations made to a regular person or political party.

Professional advice and assistance fees

For freelancers and small company owners, reimbursing expenditures is a source of comfort. As a result, if you work for yourself, you are able to write off the expenses you pay to consultants, accountants, lawyers, and other professionals if they are necessary for business-related concerns.

Savings Program

You can create a qualifying retirement plan for yourself and your staff if you operate a small business that you run independently. The best thing is that you might be able to deduct the amount you contributed to your IRA on your tax return as an individual.

Insurance for health

Regardless of your decision to itemize your expenses or not, if you are a self-employed person, you can deduct the cost of your self-employed health insurance.

The self-employed health insurance deduction, however, could not be available to you if you choose not to join another employer’s plan, you hold down another employment with a health benefits package, or you get insurance via a spouse’s employer-sponsored plan.

Start-up

The good news is that the Internal Revenue Service (IRS) gives business owners small tax relief in exchange for their efforts. Startup costs might be expensive. Therefore, you are allowed to write off any expenses related to running your business, such as those for marketing and advertising, banking fees, workers and salaries, furnishings, COGs, meals, and travel.

House Loan

The home mortgage deduction is one of the most well-known in the US tax law because it enables you to deduct, up to a certain amount, the interest you pay on a loan secured by your house (a main home or a second home). Your home purchase mortgage or a second mortgage might be the type of loan you receive.

You must submit Form 1040 or 1040-SR together with Schedule A itemized deductions in order to be eligible for the home mortgage interest deduction. The mortgage must also be backed by a qualifying house in which you have an ownership stake.