Are You Getting All the Tax Benefits You Deserve?

It’s that time of year again…

OK, it’s almost the end of February, and if you’re in the U.S. you know that it is prime tax season.

I’ve written before about general taxes in my “how to adult” series here on my blog and then went into more painstaking detail in a piece specifically for freelancers, which you can see here for more information on what forms you need and what you need to know:

I did my own taxes for over a decade and then started working with a CPA in 2018.

I highly recommend working with a tax professional if you are not one yourself, as there may be tax deductions and credits you qualify for that you either don’t know about or aren’t sure about.

I started my business at the end of 2016 and did my own taxes for that year in the beginning of 2017. By 2018, I’d been a full-time freelancer for a year and was ready to make sure my business was being taxed correctly — so I went to an expert. And honestly, I was busy with work and just wanted to outsource my taxes.

And fun fact — the expense of using a CPA is, itself, tax-deductible!

How did I find the right CPA?

The first step I took was researching and finding some CPAs (individuals and businesses) in my area. I read their reviews online and checked out their website.

I then called the ones I thought looked good and asked about their specific experience with small businesses.

I then went with the one I felt had a good rapport with me and made an appointment.

That year went fine. The CPA was less responsive than I would have liked and took forever to answer emails.

So, in 2019, I asked other small business owners for recommendations — which is always a great way to go to get referrals to great people!

In 2019, I started working with a new CPA from a referral from my cousin — who is a small business owner in New York (just like me!). She’d been working with this CPA for a few years and really liked him.

He was more expensive than my last one.

But he’s great! He’s super responsive, easy to understand, happy to explain things and answer questions, answers my emails quickly even during the offseason, and is well-versed in NY tax law, despite moving away from NY a few years ago.

I am working with him again this year and intend to continue. He knows what to ask to make sure I get all the deductions I should.

A short list of things you can write off as a freelancer:

I personally am able to write off:

  • Any and all tools and subscriptions that are for work (Grammarly Pro, Calendly, Microsoft Office, a new printer or office chair, etc.)
  • Part of my mortgage (and part of my rent when I was renting) and utilities as my office/workspace
  • Any expenses directly tied to my work (work conference fees)
  • Some medical expenses and part of my health insurance fees
  • The fees associated with filing as an LLC
  • And more.

Basically anything you spend directly related to your work can be a tax write off.

Tax deductions are NOT a reduction in taxes but are actually a tax CREDIT. Meaning it reduces the amount of taxes owed overall instead of reducing your actual taxable income.

Things that are freelancer tax deductions (and there are many more!): your home office (you can deduct part of your rent/mortgage, electricity, internet bills, etc.), wear and tear on your vehicle, office supplies, office furniture, your computer, meals or entertainment you took a client to, work travel expenses, software and online tools you pay for, business costs like insurance, part or all of your health insurance costs, education or licensing costs, your website, and more!

Other Details

There is so much more to freelance taxes than just write-offs, such as needing to keep money aside for taxes owed, needing to create a 1099 form for anyone you paid over $600 to (other freelancers, employees, etc.).

It’s also HIGHLY recommended that you pay your freelancer taxes quarterly instead of waiting until next year’s tax time — and there can be penalties for not doing so. I have mine taken out of my business checking account automatically every 3 months. It’s estimated based on your previous year’s income. If it’s too much and you make less money the next year, you’ll get a refund. If it’s not enough because you made more money than the previous year, you’ll owe it when you file your taxes.

I personally have been happy with my choice to use a CPA, as it’s one less thing I have to deal with and I am seeing a greater refund since working with one.

When I was single and then after I was married but didn’t have a business, it was easy to do my own (and my husband’s) taxes. It was very straightforward. I had our W2s, we were just renting, and it was easy to know what to do and answer the questions in Turbo Tax.

Now, as a business owner and having bought a house last year, things get more complicated and it’s nice to hand it off to someone who knows what they’re doing and I can feel assured that I’m getting the benefits I deserve without having to research tax code myself.

Don’t get me wrong — I love research! But tax codes are boring.

Check out my brand new book Concept to Conclusion: How to Write a Book and learn everything you need to know to conceive of, outline, write, publish, and market a nonfiction book!

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Entrepreneur, writer, editor, book coach, cat lover, weirdo, optimist. Author of “Write. Get Paid. Repeat.” & “Concept to Conclusion.” jyssicaschwartz.com

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