Freelance writers who don’t know about the deductions available may end up paying thousands of dollars more in taxes than they need to.
What kinds of tax deductions are available for freelance writers? Most expenses related to your home office, any software that you use, office supplies, your computer, phone or internet bills, transaction fees, and website hosting can be claimed on your tax return to offset income that you earn from your freelance writing business.
In this article, I’ll outline some common tax deductions might be available for you.
Quick disclaimer: This article is not meant to be financial advice. Tax laws vary a lot from country to country. You should check with an accountant or some other type of professional before claiming any of the expenses that I outline below on your taxes.
Tax Deductions For Freelance Writers
In most places, being self-employed will allow you to claim tax deductions for your business. This can include a wide range of expenses that you may normally incur while running your freelance writing business.
Office Space
Your office space where you run your freelance writing business can be claimed as a tax expense. Even if you’re just working out of a home office.
Normally you take the square footage of your office, and divide it by the total size of your house. Then you can claim that percentage against your rent or mortgage.
Software
I claim Grammarly Premium and other software that I use as an expense on my taxes.
If you’re a novelist, you can write off Scrivener. If you use Microsoft Office, you can claim that.
Office Supplies
I’m totally paper free, so I don’t have a printer in my office or anything. But if you use pens, papers, or any other office supplies, you can write off whatever you need for your business.
Don’t have any money to claim your expenses against? Read my article How Freelancers Can Still Make Money During A Recession then!
Your Computer
Between my business and my spare time, I easily spend 12 hours or more per day in front of my computer. So it makes sense that you’d be able to claim it as part of your business.
I’m not completely sure on how it works. Since computers are so expensive and can be used for multiple years, you may need to treat it like a capital asset and amortize it over several tax returns. But you should be able to write off your computer as a business expense one way or the other.
If you also stream on Twitch or make Youtube videos, there’s a strong argument to be made that you can expense a powerful gaming PC that you may need for video editing and other purposes. So you’d better believe that when my current PC dies and I need to buy another $1,000+ one, I’m going to make sure that I can justify writing it off for my business.
Ready to go full-time? Be sure to read through my When Should You Quit Your Job To Become A Full-Time Freelancer or Entrepreneur? article first
Internet, Phone, and Other Expenses
Basically any kind of utility or service that you at least partially use for your freelance writing business can be written off.
If you use the internet for your business, it makes sense that you can claim at least the percentage of your bill that you’d use during the 40 hours per week that you’re working. For your phone, you’d have to figure out what percentage you use it for business and what percentage you use it for personal use and split it out accordingly.
I would be cautious about writing off your car for a home-based business, unless you actually travel to visit clients. In that case you’ll need to track your mileage and see how much you actually use for business, and use a prescribed rate per mile that the government will allow you to claim.
Meals are another expense to be wary of. In most places you can claim 50% of your meals and entertainment as a business expense, but only if you’re actually meeting with a client. So don’t think that you can just write off your lunch every day as an expense.
Transaction Fees
Payment processors like Paypal and Stripe take a percentage transaction fee on every sale that you make. You can claim these as an expense, since you never end up seeing that percentage of the money that you billed for.
You can also account for things like gains or losses due to exchange rates.
Curious how much a freelance writer really makes? My How Much Money Do Freelance Writers Earn? article lays it all out!
Online Stuff
Your web hosting, domain names, and anything else required for your online presence as a business can be expensed. This also includes email tools like Mailchimp, or online course platforms like Teachable.
Education
If you’re investing in yourself, usually you can write it off. So save the receipts for any courses, memberships, or any other type of education that is directly related to your business.
Conclusion
As a freelance writer, there are many expenses that you might occur day to day while running your business. The good news is that a lot of these can be claimed on your tax return to reduce the amount that you owe.
There might be expenses that you didn’t think to claim, which could end up costing you hundreds of dollars extra when it comes to paying your taxes.
Hopefully I’ve outlined most of the common ones you might encounter. But always consult an accountant or other tax professional before trying to claim anything that I’ve outlined here.