Working as a graphic designer has a lot of advantages, especially if you’re able to work from home as a freelancer with your own business.
This article will go over all the common tax deductions graphic designers can get on their tax returns, as well as the definitions you need to be able to tell which expenses can be used as tax write-offs, and which expenses can't.
The short answer is graphic designers are eligible for a lot of tax deductions that can help them save money on business expenses and make the most of their business.
If you’re going to use these tax deductions it’s important to know what kinds of expenses you can deduct from your taxes and which expenses aren’t eligible.
We’ll cover everything you need to know, from the kinds of deductions that are available to how you can keep track of them and deduct them from your freelance graphic designer taxes.
Below is a list of common expenses that graphic designers can deduct from their taxes. As with anything financial or tax-related, there is some nuance to what and how much you can write off, so be sure to consult with an expert.
Now that we looked at the specific tax write-offs you might apply for, let's talk about what counts as a business expense for a graphic designer.
There are two important bars any tax write off must meet. The expense must be both ‘ordinary’ and ‘necessary’ for your business.
Ordinary means that the expense must be something graphic designers commonly require. That means that your computer, keyboard, mouse, and even a drawing tablet might be considered ordinary expenses.
Necessary is a little trickier to define but is less limiting than it seems at first. Necessary doesn’t mean that the expense needs to be critical for your business to continue, instead, it refers to anything that's generally helpful or useful for your business.
For example, you might not need to meet up with your clients at a restaurant to discuss an important upcoming project. But, because business meals are both ordinary and necessary (common and helpful) for graphic designers, the costs of the meal can be written off on your taxes.
There are of course some expenses that you can’t include on your annual tax return. We're including this category because there are plenty of things that aren't tax-deductible because they aren’t necessary for your business. The adult drinks we mentioned in the earlier sections on business and travel meals, those are unnecessary expenses. A desk fountain for your home office is probably also unnecessary even though the desk it sits on isn’t.
Just be reasonable about what you try to deduct and what you don't. If something is necessary, common, and business-related it's probably deductible. If it's a perk or extra you don't really need, and that doesn't contribute directly to your business success, it probably isn't.
The first thing you need to do to avail graphic designer tax deductions is to keep track of them. You’ll also need a way to make sense of your possible deductions and to report them in a way that’s clear and easy to understand.
Here’s how you manage it:
1. Using software
The easiest and most effective way to track and report your business deductions is to use business management and tax software like Bonsai Taxes. You input your business expenses and Bonsai handles organization and reporting so that it's easy to input your deductions.
There are plenty of options out there, but the combination of expense tracking and Bonsai’s tax calculator both make it one of the best options for freelance graphic designers and other creative professionals.
The other option is to track and input your deductions manually, which means that you need to track your expenses and keep the deductions organized until Tax Day. You can also hire an accountant to help you understand your deductions and options, but both options take quite a bit of time and extra energy compared to tracking your expenses as you go.