On top of figuring out how to get freelance writing clients, taxes is one of the biggest challenges new independent writers face as they establish their business. Knowing what is or is not available as a deduction, how to calculate tax brackets, and what percentage of your income should be saved for tax purposes are all critical to maintaining a healthy productive business.
This guide will help you get started by going over everything you need to know to make the most of your tax return and keep your writing business as profitable as possible.
Not only can business expenses be deducted from a freelance writer's taxes, it’s an important way to make your business as profitable as possible!
The trick is knowing what can be counted as a deduction and how to keep records of all your business expenses and potential deductions.
Need to know what expenses are deductible? Not sure if your recent business expense qualifies?
You’re in the right place.
Knowing how the IRS decides which business expenses are deductible and which aren’t is one thing, knowing exactly what kind of writing expenses are deductible is even more powerful. This list will help you keep better records of your deductible business expenses and get the most from your return.
Whether you are a freelance writer or employed by someone else, chances are you have some personal expenses related to your business. Many of those business expenses may be deductible. You may even be able to deduct the entire cost of some kinds of expenses.
There are two requirements for a business expense to be considered deductible. The expense must be both ordinary and necessary. Those terms are relatively broad, so such working definitions are important.
For an expense to be considered ‘ordinary’ is must be a relatively common expense for other people in your profession. For instance, most writers will need a computer, a subscription to Microsoft Word or another word processing program, and other common office equipment.
The second requirement is a little trickier but probably broader than you expect. Necessary refers to anything that helps you with your tasks at work or is generally helpful. It doesn’t mean that the item or service needs to be critical to your business, only that it’s helpful and used primarily or entirely for your writing business.
Some things might seem like business expenses at first, but are really unnecessary, usually because they are luxuries. These items aren't tax-deductible. This is why drinks with a client aren't tax-deductible, and some other expenses will also fall into this category.
For the most part, it's easy to identify unnecessary extras with basic common sense. As a general rule, if you aren’t sure whether an expense is deductible, you should either consult an expert or leave it off your deductions.
Other expenses aren’t tax-deductible, and it's important not to accidentally add these expenses on tax day. For example:
| Category | Tax deductible |
|---|---|
| Software subscriptions Being a writer generally means that you’ll have several software subscriptions to word processors, editing services, and even business management or tax software. The cost of those subscriptions you are able to deduct. |  |
| Electronics Writing with pen and paper isn't a great way to get your words out into the world. At some point, you'll need a computer and keyboard, tablet, for voice transcription software to digitize your work. The cost of those electronics is deductible – but if you also use those electronics for relaxation you probably can’t deduct the whole cost on your tax return. | |
| Notebooks, pens, pencils Whether you write with pen and paper to start or only use notebooks to take notes from client meetings and writing conferences, the cost of these important office supplies is also deductible. | |
| Website expenses Having an online portfolio of your work, and a place to publish articles that haven't found a home elsewhere is a must for freelance writers. But the costs of building and maintaining that website tend to add up quickly. Fortunately, hosting costs, and even the cost of a professional template for your website are tax-deductible. | |
| Conference and class costs Ongoing education is important to stay ahead of the curve in any industry, and writing is no exception. While writers working for newspapers and other big corporations tend to get training and conference entry as part of the job, freelancers pay for those services themselves. However, since those costs are valuable, necessary, and ordinary for writing businesses, they are also tax-deductible. | |
| Office furniture costs Your office furniture is one of the biggest expenses associated with setting up a home office. At minimum, you probably need a desk and office chair, and you may need filing cabinets and other furniture to make your home office an effective space. The cost of that furniture is deductible, as are future replacements and upgrades as needed. | |
| Power bill Since your office is part of your home, your power costs are one of the expenses of having a home office. A portion of your monthly power bill can also be deducted as a business expense if you write from home. | |
| Internet bill Just like your power bill, the internet is a necessary utility for freelance writers. That means that some of your internet costs are tax-deductible as well. | |
| Water bill Water might not be directly business-related, but it is necessary to maintain a healthy and sanitary home office. That means that some of your water bill is also tax-deductible as a business expense. | |
| A portion of your rent Since you aren’t using all of your home for habitation, some of that space is reserved for business use, you can also deduct a portion of your rent from your annual taxes. The amount of the deduction should reflect how much of your home is taken up by office space, but even if it’s only a few square feet around your desk you are eligible. | |
| Property insurance Homeowners insurance and renter’s insurance both qualify for this deduction because they both cover the contents (and in one case, the space) for your home office. | |
| Gas Gas is often one of the biggest expenses when you're traveling long distance by car. Fortunately, you can deduct the costs of gas for business travel as long as you keep the receipts and have record of why you were traveling. | |
| Parking costs If you’re going to meet with a client in a big city or attending a conference in a major metropolitan area, chances are you’ll have some parking costs while you’re there. Keep the receipts from those parking meters and you can deduct the cost of parking. But you can’t deduct the cost of a parking ticket, so make sure you’re paying the meter as needed. | |
| Mileage As you put more miles on your vehicle it's value decreases. Especially if you're traveling cross country to attend a conference or meet with an important client, that depreciation adds up fast. That's why you can track miles related to business travel and deduct them from your taxes. This is one cost you can’t deduct if you travel using a rental vehicle instead of your own. | |
| Tolls Traveling by the most direct route usually means taking at least one toll road. The expenses from tolls can add up quickly, but they are deductible, especially when the toll road is the best or most direct route to your destination. | |
| Vehicle depreciation Traveling for business with your own vehicle can quickly reduce its value. It’s more than just the miles, long driving puts a lot of stress on your vehicle. Since travel is often important for your business, you can deduct the value of some of that depreciation so long as you're only deducting the depreciation from business-related travel from your taxes. | |
| Car maintenance Regular car maintenance is a must, and it’s not normally tax-deductible. However, if you’re performing extra maintenance to prepare for or because of business travel that maintenance might be eligible as a business expense deduction. | |
| Plane tickets Of course, if you're traveling long distances it might be easier to fly than to drive. The cost of your plane tickets may be tax-deductible, as long as you're traveling specifically for business. You can even upgrade the ticket if you have a good reason, though you probably don't need to travel first-class every time you fly. | |
| Hotel accommodation Hotels are a must if you're on an extended trip away from home. Fortunately, the cost of your hotel room is tax-deductible, though extra privileges and perks usually aren’t if they aren’t included in your basic bill. | |
| Category | Tax deductible |
|---|---|
| Meals while traveling When you're traveling for work there are a lot more expenses than just your hotel and the cost of gas or a plane ticket. You also need food on the road, and likely will need to eat a few meals once you reach your destination. Within reason, those meals are deductible. Don’t try to deduct adult drinks or a 5-course dinner, but casual meals can easily count as business expenses. | |
| Business meals When you’re meeting with a client at a restaurant, those meals are tax-deductible. Even very nice restaurants qualify, since that may be necessary depending on the kind of client you’re working with. Just don’t try to deduct the cost of any drinks while you’re there. | |
| Meeting space rental If you can’t meet a client at their office or a restaurant, a rentable meeting space may be the next best space. As long as you don’t work in that office regularly, you can deduct the rental cost as a business expense. | |
| Health insurance Any health insurance related costs can qualify as eligible tax write-offs for freelance writers. | |
| Bonsai taxes (software) If you decide that an online platform like Bonsai will make life easier by helping you manage your tax filing and accounting, the associated costs are also tax deductible for freelance writers. | |
| Undocumented business expenses Even if the expense is something that would otherwise be tax-deductible, you may not be able to deduct an expense you don't have exact records for. Receipts are ideal, but there are some options for tracking your business expenses without a receipt. However, even if you know roughly what you spent, you can't deduct any business expense that doesn't have a paper trail. |  |
| Gas and mileage to your regular office Travel to and from your main office might seem like a business expense, but it doesn’t count since it’s a normal part of working life. You can only deduct gas and mileage expenses for business travel outside the norm. | |
| Non-business meals Meals that you eat while working aren’t necessarily deductible unless you’re speaking with a client or coworker during the meal. So don't try to deduct the cost of your morning coffee or lunch at the office, those meals won’t count. | |
Now that you know what you can deduct, how do you take advantage of those deductions? Well, there are two basic options:
1. Using software
Business and tax software are a huge help for most freelancers, especially if you don’t have prior tax experience. These programs can help you track and record your business expenses, as well as helping you determine where to file each deduction.
Software like Bonsai Tax can help with your taxes, while the rest of the business management software makes it easier to track your income and even stay better organized. Bonsai is a good affordable choice for creative freelancers, including writers.
Get started today and be better prepared for next tax season.
2. Manually
Of course, you can also track your business expenses manually and then prepare your return by hand. Usually, it's easier to do this if you keep close track of your receipts as well as physical records of your business expenses, just like your income.
When it’s time to prepare your taxes you can get everything ready yourself, or you could hire an accountant or a tax professional to help prepare your taxes for you.
Remember, you can use Bonsai's free self-employment tax calculator to estimate your quarterly taxes!
Bonsai Tax is built exclusively for self-employed workers to track expenses, maximize tax write-offs, and estimate quarterly taxes.
Discover Bonsai Tax.
Not a photographer? Find tax deductions for your specific profession below.