What Can You Write Off At Tax Time?
Cincinnati, OH | Posted: 12/06/2015 | Author: April Koenig
We’re creeping into that time of year when everybody’s stress level hits peak overload – tax season. And for freelance artists it can be an especially confusing time of year. If you’re one of the millions who oversee your own employment, you’ll certainly be asking yourself one big question at tax time: What can I write off?
Before answering, make sure you know the rules. Deductions for freelance artists can ease some of the pain when giving your hard-earned money away every spring, but doing it wrong can prove even more costly. So let’s take a quick COC tutorial on what deductions are, which deductions you can safely list, and how to track what you’re doing.
What Is A Deduction? – A tax deduction is an expense that can be subtracted from your overall taxable income. So after accounting for all of the year’s financial intake, you can start to reduce your tax liability by making deductions. The more you can deduct, the less money you have to subject to taxes. If you made $75,000 in freelance income and can make $15,000 in deductions, then your taxes will only be based on $60,000 of profit.
What Can I Write Off? – There are plenty of legal deductions to be made, as long as you know how. Start with the home office. As long as you regularly use your home as an office, and it takes highest precedence for your work, you can claim a home office deduction (excluding dual use items such as your kitchen table as a desk, etc.). A standardized home office deduction can include $5 per square foot of your home that’s used for business, up to 300 sq. ft. The cost of any app or online tool you’ve purchased to do freelance work can be deducted, as well as your website and domain costs. Part of your yearly cell phone expense can be deducted as well, as well as internet costs. Any advertising costs, office supply expenses, and even part of your homeowner or renter’s insurance can be applied to deductions. Whether auto expenses for business-related trips, interest accrued from a business loan, or the cost of education that directly relates to your freelance skillset, there are plenty of items eligible for deduction.
How Do I Keep It Legal? – While we at Creatives On Call are experienced in deductions, there’s no substitute for expertise. Consult your accountant or a tax expert for a more detailed process of what’s eligible for deduction at tax time. And above all – save every receipt! Keep every account of a transaction big or small, because you may need it for verification of your deductions. Paper items and online email purchase receipts alike should be kept, along with bills and other statements. Better safe than sorry.