Those who work in regular offices generally don’t have to worry about filing their taxes. Most of the time, their employers take care of all the tax concerns for them. For the self-employed, taxes are often a problem because they have to do all the work themselves. Determining which one is taxable and how much can be confusing if you are self-employed. If you are one of them, here are some tax tips for freelancers who work from home.
• Know the type of deductions to which you are entitled. Some of the common deductions available to the self-employed are auto expenses, contract labor, inventory, office supplies, legal fees, bookkeeping fees, shipping and delivery costs, and advertising. Of course, it will depend on the type of freelance profession you are in. There are some professions that will allow more deduction for the self-employed.
• Try to deduct taxes from the business part of your home. If you work from home and have your own home office, there are some deductions you can make for the part of the home that you use for your work. You can have deductions on your mortgage, rent, utilities, renovation costs, insurance, and real estate taxes. The larger the portion you use for your business, the higher your deductions. If your home office is separate from the main home, the laws will apply to this separate office.
• When making deductions for hired labor, be sure to list all the expenses you incurred. This will include consultant and subcontractor fees. When making the list, be sure of specific titles, such as computer consultant or graphic consultant, to label workers. This is better than just writing them as freelancers or contractors.
• Your credit card expenses can also be deducted. This is one of those effective freelance tax tips that a lot of people know about. If you are using your credit card for business expenses, you can make some deductions from your annual fee. If you have taken out a credit card loan to use in your business, they may also be tax deductible. To facilitate this, you should keep a specific and detailed record of all business expenses incurred on your credit card.
• Make your computer work better for you. In fact, you may have some deductions from your computer use, especially if you rely heavily on it for your business. The total cost of your computer and additional repair and supply costs may be deductible.
• Meals and entertainment may actually be deductible, as long as they are used for business purposes. Breakfast and lunch meetings with clients, as well as occasional drinks or dinners, may be 50% deductible. You can also count on those gifts you made to your customers, up to a certain amount at least. Since these types of deductibles are very specific, you should always keep a clean and clear record of all the expenses that you will incur.
