Can I also claim deductions on fees to license and register my business? Thanks!

And be careful with deducting any home office expenses. Make sure you have professional guidance on that because it’s a tricky area and potential audit trigger.

You are fabulous! Thanks for the business savvy information. It’s truly enlightening. I’m currently finishing up college and have decided freelance is the direction I’m going to take.

Your articles have definitely been a helpful guide in the direction I’m moving towards. Thanks for your time and knowledge.

Sincerely,
Kat

PS. Please enjoy the coffee! It came from my first freelance paycheck!

What I am about to say by no means is a way to get around this; but …. How are they going to know? If you are computer savvy and know your way around a hard drive, then their wouldn’t be anything showing up except for work files/correspondences. I just don’t get how they would ‘audit’ how you use your pc. Let me rephrase; I know how it can be done; but does the IRS really do that? lol I am afraid of them, so I do the legal stuff…rofl

I’m no expert, but I believe Ann is right. If your computer is being used for work and only work it’s a write off.

Also, regarding the audit thing – don’t NOT use deductions because you’re afraid of an audit, but audits do catch the eye of the IRS over returns without a lot of deductions. The bottom line is to be fair and keep all receipts and paperwork.

I know many writers don’t like numbers, but a couple of basic accounting books can be an invaluable reference, though they may or may not have tax info. IRS site is also helpful if you can cut through a lot of the wordiness.

My understand and I am sure Deb will correct me if I am wrong.. is that as long as that computer is used for your business it can be deducted; at least the initial purchase. I do not think this is an ‘ongoing’ deduction though; a one time deal.

I purchased a laptop for my business and while I will be doing my own taxes; I will be reading up on this information so I do it correctly.

Thanks Deb for the list. I always do better with a list; keeps my brain cells in focus!

I’m a bit confused, Deb. Last time we had a tax discussion, didn’t your guest tax expert say computers are not deductible?

I believe (but am not certain) that one can also deduct utilities (water, elec, heating oil/gas) on a office/overall area percentage basis. If your office/designated work space is, say, 10% of your total house/apmt area, you can deduct 10% of all utility expenses.

I freelance as a hobby mostly and to get a bit of extra cash, so I probably won’t be using many of the deductions that I could be. But I will be talking to my tax guy about deducting internet service since I can’t get cable or DSL at my home, and I really don’t want to pay for satellite.

Other things I was told may be tax deductible are holiday gifts you give editors. And you must be very careful with travel expenses, especially if you are using your family vacation as article fodder.

Just something some may want to consider.

Deb, you’d be surprised what things encourage the IRS to focus on a taxpayer. The number of items you submit as deductions is not as important as whether or not you have proof that those items are legitimate deductions. In addition to keeping your books properly, save your receipts and statements fanatically. Getting audited by the IRS should be no major concern or hassle then, no matter how many items you deduct.

Don’t not deduct just because the IRS audits. Those deductions are there for taxpayers like you; but, you only reap the benefits if you use them. I can’t think of many fields where the option to deduct is more applicable than freelance writing.

I’m lucky enough to have a mother who’s a tax professional. She does my taxes for me every year, and I deduct everything–and I do mean everything–that’s relevant, from computer supplies to the specific items I use in my subfield. A potential audit has never been an issue since I have all of my proof safely stored and ready to produce if needed.