Tax time stirs up a plethora of emotions for me. From the anxieties of tax preparation to the joys of possible returns, I used to scramble to align everything in time.
Last year at the cusp of tax season, I wrote a piece for About Freelance Writing titled Tax Deductions That Every Freelance Writer Should Know About. For some basic tax deduction tips as they pertain to freelance writers, I suggest reviewing my prior article if you haven’t already. It was at this time that I started heavily researching the ways in which freelance writers, like myself, can save money by being on top of all deductions, and tracking all relevant expenses.
I was motivated to write a follow up article after I upgraded my home office over the past year. This process has certainly been expensive, but it’s also helped me fine tune my writing workflow, as well as organize my tax deductions. I definitely wanted to make sure I got back what I put in to my home office, come tax time this year.
Remote Workers and Home Offices
Just as a quick recap, it’s important to remember that a home office must be of “regular and exclusive use for conducting business” and a it should be the “principal place of business,” in order to qualify for deductions by the IRS.
But just how common is working from home nowadays? And why even put forth the effort to keep so many deductions in line?
Well, remote work and working from home have becoming increasingly popular in the last decade. A post titled Team Solidarity with a Remote Office elaborates, stating that there’s been an 80 percent rise in work-from-home employees in the past ten years, which constitutes for about 2.5 percent of the U.S. workforce (over 3 million people).
While overhauling my home office, I was careful to keep all of my receipts for every purchase that I thought would applicable. Keeping receipts like these organized and cataloged is a yearly commitment–it’s a bit meticulous. But you’ll be happy you saved them in the long run!
I saved receipts for everything from new office furniture, an updated laptop, and even houseplants that clean my office air and boost my mood.
But why even do this in the first place? Is it really worth the effort all year long?
In a post on Forbes, Jonathan Medows, a NYC certified accountant who specializes in taxes for freelancers explains the tremendous benefit:
“The whole point of deductions is to reduce your tax liability,” Medows explains. “So if you have $100,000 of freelance income, and $20,000 of expenses that you can deduct, your tax will only be based on $80,000 of profit.”
Simply put, tax deductions save you A LOT of money. This cuts expenses and makes the extra responsibilities of autonomous work worthwhile.
But what are these millions of people specifically doing to get back some of their self-investments?
Even More Freelance Writer Tax Deductions
As I pointed out in my previous tax deduction article, electronic devices, professional fees, and research costs should all be calculated and accounted for around tax season.
“All physical offices supplies can be tax write offs if they are used for your freelancing endeavors, everything from pens and paper, to printer ink.”
But it doesn’t just stop there
In order to give a more all encompassing list of tax deductions for freelance writers and bloggers, I scoured information from credible posts on Freelancers Union, Wise Bread, and Upwork. Here are all of the useful deductions that I discovered:
Online Tools and Apps: All of the apps and online tools you use to run your business can be deducted. This can be creative software such as Photoshop, organization or research based tools, like Evernote, or service-based apps like Dropbox.
Business Meals: You can claim up to 50 percent of expenses related to eating out for work purposes. Be sure to keep itemized receipts for any and all business meals you wish to deduct.
Insurance: Do you have renter’s or homeowner’s insurance? A portion, based on the square footage of your office, can be deducted.
Education: Thinking about getting some coaching from Anne to brush up some of your writing skills? Well, that’s deductible! Any education you pay for which is related to your freelance work can be written off.
Utilities: Costs for internet, electricity for your home office, and the power to run your computer all qualify.
Driving costs: Sometimes you might have to drive to meet with a client or conduct an interview. If you had to drive for a job in any extent, keep track of the miles and gas costs. Personally, I use MileIQ for this.
Miscellaneous: Advertising costs, business bank fees, and costs for equipment repair are also all suitable things to write off for your taxes. You can also claim the costs of domain fees for your personal writing website.
Writing For Blogs in Other Countries
Lastly, I wanted to give some insight into protocol for writing for websites that are hosted in other countries. I’ve done this a couple of times, writing for sites in Canada and the UK.
Unless you are regularly writing for blogs on foreign domains, you should treat these types of writing gigs on a case-by-case basis. Research is truly your best friend here. Arm yourself with the knowledge; start by googling the basic questions and becoming well-versed in how other countries tax laws work. Learn how these pertain to you.
For example, the tax deadline for Canada is similar to the U.S. timeline, however, Canadian freelancers actually have until June 15, 2016 to file their return. I figured this out in a matter of minutes, by simply posing the question of “when is the tax deadline for Canadian freelancers?”
This insight is particularly helpful for freelancers in the U.S. who have written for blogs in Canada, the UK, Australia, or other English speaking countries. While the spoken languages are the same, the nuances and tax laws are not always identical.
Start simple, and get the answers you need to make the most of your deductions. Who knows, maybe you can even figure out a way to travel to another country for work purposes and write it off as a business travel expense? Who knew brushing up on your tax knowledge could be so advantageous?!
Questions? Concerns? Ideas I missed? Please post these in the comments section so this post can serve as a collaborative resource for all. Feedback and thoughts are mutually beneficial and greatly appreciated. After all, us freelancers need to stick together!
Robert Parmer is a freelance writer and student of Boise State University. Outside of writing and reading adamantly he enjoys creating and recording music, caring for his pet cat, and commuting by bicycle whenever possible. His contact info includes: firstname.lastname@example.org | twitter: robparmer
CYA note, neither Robert nor I are accountants – this article is based on Robert’s experience only.