If you’re a creative freelancer, you’re considered self-employed, and if you’re self-employed, you can deduct the expenses related to owning and operating your business. Here are 8 ways you can cut your tax bill when tax season rolls around.
Advertising and marketing expenses
To promote your business, and to attract clients, you must advertise your services. Whether you opt for traditional or digital marketing, your expenses are usually deductible.
A dog walker, for example, has his mornings booked walking dogs in his neighborhood, but he wants to include an adjacent neighborhood for bookings to fill his afternoons. He wants to get the word out. Word of mouth alone won’t bring in the number of clients he needs for a steady stream of income. He has chosen business cards for his dog-walking business, and he also wants to hire someone to build his website. Generally, these expenses are deductible.
Creative freelancers rely on software—there’s no getting around this fact.
To create infographics, for example, a marketing consultant needs access to certain data visualization platforms. To manage social media, she needs access to social media management platforms. Her software expenses will probably be deductible on her tax return.
Tools and equipment expenses
A landscape designer needs a mower, edger, blower, and a trailer for transport—and these are just the basics. Without these tools, he wouldn’t be able to do his job. Good thing his equipment is deductible!
Meals and entertainment expenses
Before tax year 2018, a portion of the expenses for meals and entertainment directly related to your business were deductible. Beginning in 2018, the new tax laws don’t allow you to deduct entertainment expenses, but you can still deduct 50% of your business meals.
A photographer meets with a prospective client to show her photography portfolio while enjoying some refreshments at a coffee shop. Generally, 50 percent of the cost can be deducted on her tax return.
License or regulatory fees paid to your local or state government are usually deductible.
A hair stylist must be licensed to cut, color, and style hair. Continuing education is required to renew licenses, and training must be completed to keep up with current trends and styles. All of this is usually deductible.
Tax software expenses
Being the smart and savvy creative freelancer that you are, you’ve e-filed your tax return with TaxSlayer. Can you deduct what you paid for the software? Generally, you can, as long as you itemize your deductions and your deductions are more than 2 percent of your adjusted gross income (AGI).
A subscription to a trade or professional journal associated with your business is usually deductible.
For example, a medical writer, who is a member of the American Medical Writers Association, has subscribed to AMWA Journal to stay abreast of the latest news and opportunities in medical communications. She can probably write off this expense on her tax return.
Vehicle expenses are usually deductible.
An artist uses his van to transport his artwork to and from galleries. At art festivals, he sells his paintings out of his van. He can deduct vehicle expenses in one of two ways: (1) using the standard mileage rate, which is $0.535 in 2017, or (2) reporting actual vehicle expenses. Because he uses his van only for his business, and not for any personal travel, he does not have to divide his vehicle expenses between personal and business use.
This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.