35 Deductions for Freelancers & Small Business Owners

With the April 15th deadline for filing your personal income taxes right around the corner, it’s time for those of you who are self-employed to get serious about your 1040s. Whether you hire a tax professional to do your taxes for you, or you plan to go it on your own with software like TurboTax, these last few weeks before the deadline are usually fraught with stress and worry.

Stress over whether you’ll owe Uncle Sam, and worry about how you’ll come up with the money! The good news is that you may be able to significantly reduce your tax burden via business write-offs. If you own your own home-based business or maybe you just do a little freelance writing on the side, you may be entitled to a wide range of deductions. “May” being the operative word, since deductions must be legitimately used by you to find work or to carry out that work.

Two other things to keep in mind:

(1) You will need proof of expenses — which generally means keeping the receipt. If occasionally you can’t find the receipt, a copy of your credit card or bank statement showing the expense will probably suffice. But don’t make it a habit.

Tip: It’s a good idea to keep receipts in a centralized place. Before filing it away, jot a quick note about what the item was — and why you needed it. Then when it comes time to prepare your taxes, you aren’t left trying to remember what you spent $5.92 at Office Depot on 11 months earlier.

(2) When in doubt, leave it out — or consult with a professional. For example, if you are wondering whether you can write off your $5,000 stereo system as office equipment, the answer is probably no. Of course, if you are a freelance writer specializing in music reviews, the system might be a capital expense. Which might entitle you to write off value of the system over a number of years (again, consult with a tax professional).

So, without further adieu, here are 35 of the best write-offs that you may be able to take advantage of in your home-based business:

1. Books, magazines, newspapers, DVDs or CDs used for research or related to your field
2. Conferences, seminars and further education classes
3. Webinars and fee-based podcasts
4. Memberships in professional associations
5. High speed Internet (usually you can write-off the whole bill, although your accountant may recommend a percentage if you also use it for personal gain)
6. Cable or satellite, if you use it for your job (and no, watching Days of Our Lives in the background as you work doesn’t count)
7. Website/blog hosting fees, design charges, and maintenance costs
8. Domain name fees — initial purchase and the annual renewal
9. Printers, copiers, scanners, fax machines
10. Cordless phones (for dedicated office line)
11. Ink or toner for printer / photocopier
12. Local phone bill (if used by a dedicated office line; check with an accountant about taking a percentage of your home bill as that might be trickier)
13. Long distance phone bill, for business calls
14. Cell phone (if used exclusively for the business; consult with an accountant about writing off a phone that is used for both business and personal)
15. New laptop or desktop (usually it may be replaced every three yeas)
16. Computer upgrades, hardware and software
17. Zip drives, recordable DVDs, hard drives
18. External data storage, if you pay someone else to back up for you
19. Office furniture (tables, desks, chairs, bookshelves, filing cabinets, etc.)
20. Depreciation costs of your computer and other office equipment
21. Professional services, such as the fees for your accountant, graphic designer, printer or copywriter
22. Subcontractor fees
23. Business cards (design and printing) and stationery
24. Office supplies, which includes but is not limited to pens, paper, pencils, paper clips, file folders, calculators, labelers, highlighters, etc. etc. etc.
25. A proportional percentage of your rent (or interest on your mortgage), utilities, and even renters’/home owners insurance.
26. Online or offline advertising costs (from banner ads and Yellow Pages ads to posters and mailers)
27. Photocopying or faxing
28. Health insurance premiums (if you are self-employed, you can deduct the whole cost of your monthly premium from your 1040)
29. Restaurant / coffee shop bill, if you meet a client (you can’t deduct your charges, but you can write-off your prospective or current client)
30. Gifts or cards for clients
31. Postage and shipping fees
32. 50% of your self-employment tax
33. Renovations of your home office space (if you refinish the basement to turn it into an office, you can write off part or all of your expenses)
34. Checking account and business credit card fees
35. Travel expenses, including gas, parking, tolls, airfare and cabs (check with a tax professional about how best to do this)

Did you find a business expense you didn’t know about? Do you have any that I met? Leave me a comment, I’d love to hear from you!