I'm a freelancer. What can I write off?

Question

I work from home almost all the time. When it comes to taxes, what can I write off? Internet bill, gas money, portion of my rent, what else? Thanks!

I'm doing my own taxes. Not paying someone else to do what I can do myself.

Answer 1

Actually, you can't LEGALLY write-off your rent or any portion of it.
(Check publication 17 on the IRS site it's there)

You can only legally write-off home office space used if it was separate from your home and used specifically for business.
They also allow you to write off the garage(or that portion of your mortgage and repairs) if you converted it into an office.
Not to say that people don't do it all of the time, but if you get audited, they will take away that deduction (and I'm sure that's what you're trying to avoid).

Gas:
You can use the standard deduction of 44.5cents per mile or actual costs for gas, oil, and any other vehicle maintenance costs.

Other:
Anything else used for business like: Professional journals, magazines, and newspapers that are job-related, Dues to professional organizations, Business gifts up to $25 per customer or client, Tools for use at your job, Cellular phones required for business, Fees for tax preparation or advice, Personal property taxes on cars, boats, etc., 50% of business dinners for clients.

I'm sure there are some more. I'll add them if I can think of anything else.

Answer 2

If you work at home most of the time, you can write off your house/apt. payments for a home office. You can also write off the internet service that you use for research, you can write off part of the electric bills and telephone bills, if your heat is not electric, you can write off part of the gas bill.

It would be to your advantage to take all of your information to a tax office of your choice and have them do your taxes for you, they know "how much of what" can be deducted.

If you do not have all of your bill stubs and pay stubs, take your checkbook to show deposits and withdrawals...or ask the bank for a print out of you account for the last year..1/1/2006 to 12/31/2006. Take your W4 with you also.

Answer 3

In order to take the office in home deduction, you must have an area that you use "regularly" and "exclusively" for the freelance activity. Most people fail the "exclusively" part. By IRS rules, this means that you used this area for NOTHING else besides the freelance activity. I believe there was a case once where a home office deduction was disallowed because the taxpayer kept stock records in the desk in his home office. Stock purchases and sales are personal in nature and this disallowed the entire home office as it now failed the exclusive test.

Answer 4

You can deduct all "business related" expenses, from the home office to car expenses - mileage, maintenance, gas, tolls, parking, insurance, license; any supplies, tools and equipment (computer, Internet service, phone line, printer/scanner, ink, paper, and the like), medical/dental expenses and the like in proportion to the percentage of "business use".

You can also open a Self-employed Retirement Account, I believe the maximum contribution (deductible) is $20,000 (check that figure with a bank or brokerage house).