Being your boss is awesome, everyone loves it but being prepared for the challenges that come with it is very important. Freelancers are envied by some full-time employees as some freelancers can earn as much pay as a regular 9 to 5 pm employees who have less work flexibility.
It is expedient to have a great understanding of the peculiarities of freelancing, especially as it concerns taxes. If you are a freelance graphic designer with plenty of clients you will understand that it pays off because your payment is protected, time is scheduled, and you can be very flexible. In all, you should not forget that even as a freelance graphic designer, you have freelance graphic design taxes responsibilities to fulfill to the IRS.
Rising in the graphic design business as a freelancer can be rewarding, but at the same time, expensive. All expenses are on you as an independent consultant, but the knowledge of tax deduction would help reduce your freelance graphic design taxes estimations. According to IRS, business expenses are those expenses that are directly related to your profit-making business.
Below are 8 tax deductions that you should not miss as a freelance graphic designer to save money on your taxes.
Start-up costs are capitalized generally, but both organizational and start-up costs can be deducted. The organizational cost is what you used to research and create your business, and they can be added to your deductions up to $5,000. Instead of spreading it over the years, this can be used as a current expense in your graphic design business.
You can have items like computers, cameras, desktop publishing applications, and so on deducted as long as they are used for the business.
It is important even as a freelancer to find customers and not just hope that they will come to you. This can be very costly if not added to your deductibles; some of them are flyers, online ads, business cards, websites, and so on.
When you go for a meeting or travel to work for clients, you can also have this cost deducted. You can deduct actual expenses like new tires, car repairs, car insurance, and so on. Tax deduction for mileage expenses is set at 54 cents/mile.
If your home serves as your area of work, you can also add it to your deductibles under expenses like utilities, mortgage, property taxes, and so on. Home office deduction can be up to $1500 according to IRS.
This covers expenses for classes, training, and conferences that you go to make your graphic design business more profitable. You can receive up to $2,000 tax credit under the 'Lifetime Learning Credit' and up to $4,000 under the Tuition and Fees deduction.
This can also be added to your deductibles when filing for your freelance graphic design taxes. Software like QuickBooks can help you with maximizing your business deductions.
As a freelancer, you are not a machine; you have the advantage of living healthy because of the work-life balance you enjoy. However, when you are down, your health insurance can be deducted from your freelance graphic design taxes, according to your insurance coverage.
There are many deductions you can enjoy for your freelance graphic design taxes. Make sure you maximize them or get a professional that is versed in freelance taxes to help you with a legal tax deduction and estimation.