Maximizing Tax Deductions for Freelancers and Small Businesses

Home Office

Contrary to popular opinion, you don't have to rent office space or a venue in order to deduct or claim it as an expense. If you work from home, and have a section of your home that you use regularly and exclusively for your business, then you can deduct that portion of your home office on your taxes.

Utilities

If half of your phone and internet usage goes towards your business necessities, then you can claim that as an expense.

Education & Training

Any education or training that is needed to keep you up to date and knowledgeable in your field is considered a tax deductible expense.

Travel

Whether you travel for work by car or airplane, you may be entitled to multiple deductions. Airfare, hotels, and 50% of meals while traveling for business are deductible. For business use of your car, you must pick one of two methods: the standard mileage rate, or the actual expenses method (the business-use portion of gas, insurance, maintenance, and depreciation). You cannot use both methods for the same vehicle. See IRS guidelines for travel expenses.

Other Expenses

Miscellaneous expenses such as software subscriptions, business magazine subscriptions, envelopes, business cards, printer cartridges, pens, etc., are all tax deductible expenses and fall into different expense categories.

Equipment & Depreciation

Many physical assets that have a useful life greater than 1 year may be depreciated. Depreciation is when, rather than deducting the total cost of a business purchase at the time of the fact, you deduct a portion of its total cost every year until it reaches the end of its useful life (salvage). Two great examples would be laptops and cameras.

Intangible Assets & Amortization

Just as with physical assets/equipment, intangible assets may be expensed over their useful life of greater than 1 year. Amortization is the equivalent of depreciation but applies to intangible assets, such as software licenses, domain names, intellectual property, customer lists, and more. See IRS guidelines for depreciation and amortization.

Disclaimer: This article is for informational purposes only and is not meant to be financial or legal advice.