Working as a freelancer can be a tough racket. In addition to the unpredictability of your earnings, you’ll miss out on certain benefits that a major employer can offer, such as health insurance . On the plus side, the IRS views freelancers as business owners. This means you can take advantage of a whole slew of tax deductions that you may think are only reserved for major corporations. Here are some of the most important tax deductions you may be entitled to as a self-employed individual, including a few that may be surprising to you . Business Loan Interest Interest you pay on money you borrow for business expenses is tax-deductible. Perhaps surprisingly, this also applies to business expenses you put on a credit card. It can make your life a lot easier at tax time if you use a specific business credit card and keep your personal expenses physically separated. However, as long as you can identify which purchases and interest apply specifically to your business, you can claim a tax deduction. Home Office Deduction If you’re a full-time worker and you use a private room in your home for your business, you can obviously claim a home office deduction for that portion of your house. However, even if you simply work a few hours a week in your garage as a side gig , you may be able to claim the home office deduction as well. Just remember that you must identify a specific area of your home that is used strictly for business purposes and limit your deduction to that area only. Self-Employed Health Insurance Premiums If you’re a freelancer and don’t work for another company, you likely have to pay your own health insurance premiums. While this is certainly one of the downsides of life as a freelancer, at least there’s a tax break waiting for you. The IRS allows freelancers to deduct all of their self-employed health insurance premiums, including any you may pay for your family members. Business Use of a Vehicle Depending on the type of work you do, you likely drive your car at least some of the time for work purposes. This means that you use your vehicle for business, allowing you to take tax deductions on everything from your oil and gas expenses to maintenance costs and even the miles that you drive. Bear in mind, however, that your deduction is limited to the percentage use that can be allocated to your business use only. Business Use of a Phone You may not think that talking on the phone can provide tax benefits, but if you’re a freelancer it certainly can. The cost of your phone, your mobile service plan and any insurance or related costs can be written off if you use that phone for your business. As with other expenses, though, your deduction is limited to the percentage of business use that you get out of your phone. For example, if you use your phone 30% of […]
