What Can You Include on Your Expenses? The Best Tax Advice for Freelancers
Many freelancers misunderstand their expenses and neglect to include things that could — and should — be included. It’s an expensive mistake to make, and so when you’re trying to make it as a freelancer, it’s important to include everything you can.
Here are just a few of the things that you might be able to include as tax-deductible expenses. Just remember, I’m not an accountant and I don’t know your financial situation. The following is just a guide to highlight some of the things that you might be missing. You should check with your accountant for the specifics.
Travel Expenses
Travel expenses are some of the most common tax-deductible expenses and could add up to thousands of dollars a year. Travel expenses may include all the following:
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Every time you book a taxi, take a train ride, or hop on the subway, make sure you keep the receipts.
Subscriptions
Does your job require you to join certain business organizations and clubs? Then you could include them as an expense. If you cover films and TV shows for a living, whether that means writing film reviews, creating topical pieces on the latest must-watch shows, or even creating prediction articles for horse races, you can include TV and streaming subscriptions as well.
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Books and References
You don’t have to be a reviewer to include books as a tax expense. Any time you use them as a reference and any time they connect to your profession, they can be included.
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For example, a freelance language tutor could include all language reference books and workbooks while an author may include both fiction and non-fiction.
Bills
Mortgage payments, rent payments, gas/electricity, and other bills could be included. This is a problematic area, though, and it’s something you will need to discuss with your accountant. Ultimately, it will come down to where your office is (is it a separate premise or is it just a room in your home?) and what you use it for.
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Legal Fees and Professionals
If you don’t have the time to prepare your taxes, hire an accountant to do them for you. Not only will they save you time and frustration, but you could also include the accountant’s fees on your taxes. The same is true for legal fees, as well.
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It’s not just about getting sued or suing others, either. “Legal fees” also includes the money you spend protecting trademarks and copyrights, as well as the cost of asking an attorney to check privacy policies/terms and conditions, and freelance contracts.
Business Meals
You can include business meals as tax-deductible expenses if they are genuine business meals. That doesn’t mean you can visit the best restaurants every day just to enjoy some fine fare with your better half, or even by yourself. But if you’re taking clients out for meals to negotiate or just talk shop, it’s a valid expense.
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Offices and Office Supplies/Equipment
Don’t have an office? It doesn’t matter, as you can still include office supplies as expenses. In fact, you can probably include some or all your office rent as well, even if that office is in your home.
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Some tax-deductible office supplies include:
Applications and Software
Apps, widgets, and software play an important role in the life of every freelancer. Editors and writers may turn to programs like Copyscape, Grammarly, and Final Draft; designers often turn to Photoshop; musicians may use Logic Pro X.
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Some of these programs are cheap; some are free. But others can cost hundreds and even thousands of dollars a month. If you’re an SEO guru, for instance, there’s a good chance that you have subscriptions to one or more SEO programs, including SEMRush, Moz, Majestic, and Ahrefs. It can get expensive, but most of these subscription costs can be added as an expense.
On a general level, you also have software charges such as:
Promotions
Marketing is an essential component of every business and that’s true for freelancers, as well. Every cent that you spend promoting yourself and your products or services is tax-deductible.
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Have you dropped several thousand on Facebook Ads to promote your services? Did you spend money on Google Ads to advertise your website? What about banner ads, magazine/newspaper placements, TV ads, and radio ads? All these things can be included.
The same is true for publicists and PR companies. These services aren’t cheap and could cost you thousands of dollars every month. They help to increase your sales, boost your exposure, and drive more traffic to your website, but they can also leave you severely out of pocket, so including them as an expense will help.
More Information
The best way to grow as a freelancer is to keep reading, learning, and improving. I’ve had a few discussions with experienced freelancers over the years and you can read these guides and watch the podcasts on my website or YouTube channel.
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For instance, this?guide with Joe Yoon?highlights what it’s like to be a self-employed individual in the social media age whereas this?one with Nick Aldis?approaches the subject from the perspective of a multi-brand entrepreneur. And that’s just scratching the surface, as there are many more videos to watch and guides to read. Follow the links for more information.