Tax Deductions if Freelancing

Writers need to keep good tax records.

The IRS allows many tax deductions if freelancing. As a self-employed entrepreneur, it's your responsibility to learn which deductions you are allowed to claim.

Common Tax Deductions if Freelancing

Even though writing is a business with a minimal amount of overhead, freelance writers still incur a number of business-related expenses throughout the typical year. Fortunately, many of these expenses qualify you for a tax deduction.

Technology

Although people have been writing for quite some time, the modern freelance writer requires a fair amount of technology to keep his/her business running. Luckily, these expenses are tax deductible. For example:

  • Computer
  • Printer
  • Fax machine
  • Scanner
  • Software for your computer, such as Microsoft Office and some form of up-to-date virus protection
  • Separate phone line for business calls
  • Digital camera (if you're expected to submit images with your articles)

Office Supplies

As a freelance writer, you'll probably spend a lot of time shopping at the nearest office supply store. Some of the tax deductible items you may purchase include:

  • Paper
  • Pencils
  • Pens
  • Printer ink
  • File folders
  • Envelopes
  • Stamps

Research Materials

Most writers are avid readers, so it's a good thing many of the reference materials you use for your work will be tax deductible. This includes:

  • Reference books for writers, such as dictionaries, style guides, and the Writer's Market
  • Books needed for a specific project
  • Magazine subscriptions related to writing or your areas of expertise
  • Subscriptions to online databases needed for your research
  • Fees for photocopies when conducting research at your local library

Professional Memberships

Writers who belong to professional associations such as the American Society of Journalists and Authors or the National Writer's Association can deduct these membership costs as a legitimate business expense.

Rules for Tax Deductions

As a freelance writer, you may find it helpful to keep in mind the following rules for tax deductions:

  • Always save the receipts for your purchases. It's a good idea to plan on filing them at least once per month, so you'll have less work to do when tax time rolls around.
  • If possible, try to set up a separate bank account or credit card that you can use to pay for all of your writing-related business expenses. This makes recordkeeping much more convenient and will provide some legal protection if you are ever audited.
  • Be honest! While it's a good idea to take every possible tax deduction, lying to save money is illegal and unethical.

Home Office Deductions

If you have a separate area of your home designated as your office for your writing business, you are entitled to take home office deduction. This allows you to deduct a portion of your rent or mortgage and any necessary utilities from your taxable income. You can learn more about the home office deduction on the IRS Web site.

Self-Employment Tax

The term self-employment tax is used to refer to the fact that people who own their own businesses must pay the portion of Social Security and Medicare taxes that their employer would pay if they worked in a traditional job. The current rate for self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare. However, you can deduct half of your self-employment tax in figuring your adjusted gross income. You can learn more about self-employment taxes by visiting the IRS Web site.

The Value of Professional Advice

Although many people do choose to file their taxes without the assistance of an accountant, investing in professional help preparing your return is a smart move. As a writer, you want to be able to focus as much of your attention as possible on the core aspects of your business. Taking advantage of the experience of an accountant who understands all the available tax deductions if freelancing will allow you to spend more time writing and less time worrying about how much money you owe the IRS.

Additional Information

To learn more about how taxes affect your freelance writing business, check out the following helpful resources:

Tax Deductions if Freelancing