Working as a freelance designer comes with a lot of perks. Not only are you your own boss, but you can set your own rates and work whenever you want. However, if you’re not familiar with self-employment/FICA taxes, filing can be an intimidating, terrifying, and stressful experience.
If you’re one of many freelancers that wonder how they’re going to fulfill their 15.3% tax burden, you can breathe a sigh of relief knowing this list of deductions will help you lower your bill.
General Freelance Designer Write-Offs
As a freelancer, taxes can be one of the most overwhelming and intimidating aspects of self-employment. Keeping track of deductions, filing quarterly returns, and understanding FICA tax requirements are just some of the challenges you may face as a freelance designer. Fortunately, there are plenty of online tools available to help you stay organized, such as using a tax calculator that can help you estimate how much tax you may owe, depending on your annual earnings and other factors. This way you can ease some of the stress that comes with filing taxes.
Whether you work from home or in an office, the following deductions will make your freelance designer taxes easier to pay off as long as you keep track of your business-related purchases.
- Phone: If you frequently use your smartphone for business, you can deduct a portion of your phone bill. Keep in mind that you can’t deduct 100% of your bill, but the IRS will typically accept 60-80% if you’re a remote worker with many clients.
- Electronics: Freelance designers need a laptop, desktop, or both to complete work for their clients. Computer hardware, like tablets, studio cameras, and hard drives, are tax-deductible as long as it’s within reason or a necessary expense for your career.
- Website and Software: If you purchased a domain name, hosting for your website, or software to run it, you can write it off. Other software, like Adobe Creative Cloud or Photoshop, is also deductible because you’ll need design software for your job.
- Professional Services and Development: Did you hire a lawyer, graphic artist, or programmer for your business? Or, did you invest in your business by investing in your own education? Either way, you can deduct both from your taxes this year.
- Payment Processing and Bank Fees: You can deduct processing fees from services like PayPal or Stripe when your clients pay using these apps. You can even deduct monthly charades from your checking and savings account in most cases.
- Marketing and Advertising: Did you pay for advertising this year to promote your services? Whether you put money towards an email marketing software, social media ads, or a Google PPC campaign, you can write off these expenses.
Work-From-Home Freelance Designer Write-Offs
Not all freelance designers work from home, but they can cash in on even more write-offs if they do. Don’t forget about the following deductions if you work out of your house.
- Home Office Expenses: Replacing your monitor, sticky notes, or pens all count towards home office business expenses, but you need an itemized bill to prove them.
- Utilities, Rent, and Internet: You can deduct a portion of your utility (electricity, water, heat, etc.), rent, and internet bills based on the square footage of your home office.
- Property Taxes: If you own your home and pay property taxes, you can deduct a portion of your property taxes. This deduction is also based on the square footage of your office.
- Insurance: Freelance designers can deduct a portion of their rental or homeowners insurance. If you have business or liability insurance, you can also deduct them.
- Maintenance: Cleaning expenses and home repairs are tax-deductible. Home repairs are still write-offs if you worked on a part of your home that wasn’t your office.
Travel and Client-Based Freelance Designer Write-Offs
Even if you work from home, you may have to meet with clients in person or travel to a different part of the country for a networking event. Either way, the following expenses are tax-deductible.
- Office Rental: Coworking space and memberships are tax-deductible.
- Food and Drinks: Business-related meals are 100% deductible within reason.
- Transportation: You can deduct economy airfare tickets, car maintenance, and gas.
- Accommodations: You can write off hotels and Airbnb bookings if it’s for work.