Welcome to your ultimate guide for maximizing tax deductions as a creative, freelancer or gig worker. Whether you're delivering meals, doing makeup, or freelance writing, this guide will help you navigate the often-confusing world of tax deductions.
Understanding these deductions can significantly reduce your taxable income, putting more money back in your pocket.
You might be delivering food or creating content for a brand, but you’re basically running your own business. With that comes the ability to write off a portion of certain expenses like your car and phone. Treat your business like a business and take advantage of added tax benefits.
Working as freelancers, creatives, and gig workers means you’re an independent contractor. The company you contract with will send you a Form 1099 detailing how much money you made. If you were an employee, you’d get a W-2 but since you’re a freelancer, you’ll get the Form 1099 which must be reported on your tax return.
In addition to tax benefits, it’s recommended that you also create an LLC or corporation to separate your freelance or creative business from your personal finances.
Table of Contents
Tax Deductions: Auto and Mileage Expenses
On your tax return, you can deduct either a standard mileage deduction based on miles you drive OR your actual expenses like gas, insurance, and maintenance. When filing your taxes, your tax professional will determine which option is best to minimize your tax liability.
Note that the amount of actual expenses is based on the time you use your car for business vs. personal reasons.
1. Vehicle Mileage
Track all the miles you drive for business purposes. The IRS offers a standard mileage rate that you can use to calculate your deduction. Ensure you maintain a detailed log of your trips to maximize this deduction. Use a mileage tracker app to make it less stressful.
2. Fuel Costs
If you choose to deduct actual vehicle expenses instead of using the standard mileage rate, you can include the cost of gas.
3. Maintenance and Repairs
Expenses for maintaining and repairing your vehicle are deductible if you use your actual vehicle expenses for the deduction. This includes oil changes, tires, and car wash memberships. Although it’s not a maintenance or repair, you can also deduct a partial cost of your vehicle registration.
4. Auto Insurance
A portion of your auto insurance costs can be deducted if the vehicle is used for business purposes.
5. Lease or Loan Payments
If you lease or finance your car, part of the interest on the car payments related to business use can be deducted, depending on the percentage of time you use your car for business vs. personal reasons.
6. Vehicle Depreciation
If you own your vehicle, you can deduct a portion of the vehicle’s depreciation based on its business use.
Tax Deductions: Phone and Internet Costs
7. Cell Phone Bills
You can deduct the portion of your cell phone bill that relates to your business usage. Keep detailed records of your business calls and data usage.
8. Phone Purchase and Accessories
If you buy a new phone case or accessories specifically for business, you can deduct these costs. An example is ordering a phone case with your business logo on it – that would be a deductible business expense.
9. Home Internet Costs
A portion of your home internet costs can be deducted if used for managing your business operations, such as tracking gigs, communicating with clients, or completing paperwork.
Tax Deductions: Home Office Expenses
With home office expenses, the deductible amount depends on the size of both your dedicated office space and the total size of your home.
10. Rent or Mortgage (proportional)
If you have a dedicated space in your home for managing your business, you can deduct a portion of your rent or mortgage.
11. Utilities (proportional)
Similarly, you can deduct a portion of your utility bills (gas, electric, water, trash, etc.) based on the square footage of your home office relative to the square footage of your entire home.
12. Office Furniture
Expenses for furniture used in your home office, such as a desk or chair, are deductible.
13. Office Accessories and Decor
Wall art, curtains, rugs, and items to make your office a productive space are tax deductible. For the plant lovers, those cute plants and planters for your home office are tax deductible.
Tax Deductions: Insurance Costs
14. Business Liability Insurance
This insurance protects you against potential legal claims and can be deducted as a business expense. In addition to traditional business insurance, it’s a good idea to also explore cybersecurity insurance to protect information you share or store online. Many entrepreneurs don’t think about that until it’s too late.
15. Health Insurance Premiums
Self-employed individuals can often deduct health insurance premiums paid for themselves and possibly their spouse and dependents.
Tax Deductions: Supplies and Equipment
16. Job-specific Items
Things you purchase specifically to complete your freelance gig can be deducted as a business expense. With food delivery gigs, for example, you might purchase your own delivery bags to keep food fresh. People are more likely to tip and rate better if their food is fresh. This could help increase your income.
17. PPE (masks, gloves, sanitizers)
Personal protective equipment is essential for safety and can be deducted.
18. Mobile Device Holders
Items like phone mounts or holders used in your vehicle for business purposes are deductible.
19. Chargers and Batteries
Expenses for chargers and backup batteries to keep your phone or laptop running while on the job are deductible.
Tax Deductions: Parking and Tolls
20. Parking Fees
Fees for parking are deductible. Specifically, they are deductible when you travel to clients or job sites, not for parking at your own place of business.
21. Toll Costs
Tolls paid while driving for business purposes can also be deducted.
Tax Deductions: Bank Fees and Interest
22. Business Bank Account Fees
Monthly fees for maintaining a business bank account are deductible.
23. Credit Card Interest (business-related)
Interest on credit card debt used for business purchases can be deducted.
Tax Deductions: Marketing and Advertising
24. Business Cards
Expenses for printing business cards to promote your services are deductible.
25. Flyers
Costs associated with printing and distributing flyers for your business are deductible.
26. Online Advertising
Any online advertising costs, such as social media ads to promote your services can be deducted.
Tax Deductions: Technology and Software
27. Mileage Tracking Apps
Subscription fees for apps that help you track your mileage are deductible.
28. Expense Tracking Software
Software that helps you track business expenses can be deducted.
29. Route Optimization Apps
Apps that help you optimize routes to save time & gas are deductible.
Tax Deductions: Training and Education
30. Online Courses
Expenses for courses that improve your business skills or efficiency are deductible.
31. Workshops
Fees for attending workshops relevant to your business can be deducted.
32. Educational Books
Books that provide valuable business knowledge are deductible. Your investment in this guide is tax deductible!
Tax Deductions: Office Supplies
33. Paper
Paper used for business purposes is deductible.
34. Pens
Pens and other writing instruments used for business are deductible.
35. Notebooks
Notebooks used for business can be deducted.
36. Printer Ink
Costs for printer ink used in your office are deductible.
Tax Deductions: Legal and Professional Services
37. Entity Formation Costs
Expenses related to forming an LLC or corporation for your business are deductible.
38. Legal Consultation Fees
Legal advice or services related to business operations can be deducted.
39. CPA Fees
Fees paid to a CPA for tax preparation, accounting, and business consulting are deductible.
40. Business Consulting Fees
Fees paid to consultants for improving your business can be deducted.
Tax Deductions: Computers & Mobile Devices
41. Computers and mobile devices
If you purchase a new laptop or devices to help in your business, that can be partially deductible. An example is buying an iPad for for working on-the-go.
Tax Deductions: Contributions & Donations
42. Retirement Plan Contributions
Contributions made to self-employed retirement accounts, like a SEP IRA, are deductible.
43. Donations
Making charitable contributions is tax deductible. The money and/or property donated to eligible 501(c)(3) organizations can be deducted.
Tax Deductions: Gifts and Client Meals
44. Client Gifts (subject to IRS limits)
Small gifts given to regular customers or partners are deductible, subject to IRS limits.
45. Meals with Clients or Partners (subject to IRS limits)
Meals that have a business purpose can be deducted, subject to IRS limits.
Tax Deductions: Other Miscellaneous Deductions
46. Uniforms or Work Clothes
Expenses for uniforms or clothing required for the job are deductible.
47. Safety Equipment
Safety gear necessary for your work can be deducted.
48. Snacks and Drinks for Personal Use While Working
Snacks and drinks consumed while working are deductible as they help keep you going during long shifts.
49. Membership Fees
Fees for joining relevant professional associations can be deducted.
Our hope is that you learned something from this about running a business. Look at your “gig” as more than a gig.
Note: While this post offers valuable business and tax insights, this information should not be considered a substitute for professional advice. Tax laws and regulations can be complex and vary by jurisdiction. Consider a consultation with Winston CPA Group for personalized tax guidance tailored to your specific situation.
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