If you’re a freelance — or contract — worker, listen up. You might be missing out on some key tax write-offs.
It doesn’t matter what you do for a living, be it a photographer or an accountant or bookkeeper, understanding how to file your taxes with all of the appropriate write-offs is critical.
Here are some tips:
First, never mix your personal finances with your business finances. This is imperative and could turn into a terrible nightmare in the chance you are audited.
Second, if you’re not comfortable in handling your taxes, it’s worth paying some extra money to have someone help you with it. If you’re on the edge, meaning you have a little bit of knowledge, but want some assistance, there are some great online programs that can walk you through the basics.
All right, now it’s time to look at some write-offs that you may have forgotten about along the way. These can help save you some serious dollars. So, start saving receipts, sit down and get ready.
Office Space: No, not that amazing movie. The place where you work from — be it your home office or a space you rent — can be a write-off. That’s right: 100 percent of your office space can be written off. Now, for those of you who live at home, don’t confuse this with your mortgage or rent payment. If you have a home office, you can only write off a percentage of your monthly rent or mortgage. That number is based upon how big your office is. So, if you live in a 1,000-square-foot apartment for $600 per month and your office is 10×10-feet, or 100-square-feet, you can write off 10 percent of that monthly rent, or $60. That works out to $720 for the year. You can do the same for utilities, such as electricity and heat, but only for as many hours as you work. That’s why it’s critical to log your work time.
Supplies: Every office has necessities that occasionally need to be refilled. And these items — for the most part — can be written off. That means printer ink, staples, even a new computer to a certain extent (you would write off a portion of it each year for the next three to five years). Don’t get greedy. You might have a tough time explaining a new television set and sound system, especially if you’re line of work doesn’t really call for such technology. The IRS looks for these types of items, which can cause red flags.
Food: You probably do some traveling in your career. If so, you need to eat. If you’re not at your normal place of work, you can write off food costs. You can also write off some entertainment costs. Again, don’t get greedy. If you go to a show with a client that you paid for, you can write off one of the tickets and it’ll pass as a business expense. Writing off both could spark a red flag.
Training and professional services: You’re always learning and if that education and training is part of making you better at your job, you can write it off. Additionally, if you need to hire someone to handle one aspect of your job, that, too, can be written off.