Freelancers can also Take Tax Breaks
Although the self-employed lifestyle may seem amazing at first, your tax preparation burdens can increase over time. There is a long list of deductions you need to be familiar with in order to get the most out of your tax preparation experience. Some of these deductions aren’t that obvious and you may wanna ask a Fort Lauderdale tax attorney about any extra deductions that may apply to your specific circumstances.
Invoices that go unpaid
The more you do freelance work the more you will realize that not everyone will pay your work like they promised to. If you have experienced this scenario, there are good news for you! You can write off these invoices but it can be a bit complicated. Why is that? The invoice needs to be part of your gross income. That means you must report your earnings regularly. These unpaid invoices will be considered bad debts.
Some freelance jobs will require time to research a specific subject. Research-related activities or material such as books and attending conferences can be deducted at the end of the year. Just make sure you keep those receipts.
Coffee shop meetings
Freelancers often use coffeeshops to meet with clients. If you discuss a project at Starbucks or Dunkin’ Donuts, for example, you can write off half of these expenses when filing your income tax. You will be surprised how much a couple of bucks can add up by the end of the year. Just make sure you keep your receipts that way you can go back and calculate the average amount spent at the coffee shop. You can even write details in these receipts about the purpose of this meeting and who did you meet with.
Some job sites will charge you to access their listings. These costs are also deductible. There are other expenses associated with site membership. Even when you access these services for a limited amount of time, they can be deducted from your taxes. Keep the receipts online or print them out for your records.
We live in the PayPal era. Many people consider it a safe method when paying online. PayPal fees can be written off as well. Print your account history before filing your income tax at the end of the year.
Assistants and freelancers
Sometimes freelancers team up with other freelancers, and assign them part of their workload. You can hire an assistant and deduct it from your taxes as well. These transactions must be thoroughly documented in order to prove that someone helped you take on some work. Remember these as subcontractors and not employees. You will have to pay more taxes for an employee. There should be an invoice paid in your records that proves a virtual assistant actually assisted you.
Part of your mortgage interest, home insurance as well as utilities can also be deducted when filing your taxes as an independent contractor. Home office deductions are a bit complicated but worthwhile. There should be a space in your house dedicated for work only. Your home office expenses are calculated based on the amount of space you use for your home office.
Phone or application
The IRS allows freelancers to deduct their first phone line expenses as well as apps such as Skype, MSN Messenger, WhatsApp, and Viber. You can also deduct expenses from your cellphone and second phone line in your home.
In order to get the most out of your taxes, you should seek the expert legal advice of a Fort Lauderdale tax attorney. Contact us today and schedule your initial case evaluation.