The top individual income tax rate for 2023 is 37%, meaning high-income freelancers will have to part with a massive chunk of their business income to pay taxes.
However, you can still reduce your tax burden significantly by using tax deductions to decrease your taxable income. This guide looks at some standard tax deductions for different freelance professionals that can help make taxes more bearable.
Before we get into the tax deductions, it is essential to clarify that we are not tax preparation experts and are hence, not offering tax advice. Depending on your specific situation, it will be better to seek tax advice from a tax professional or certified accountant.
1. 3 Tax Deductions for Copywriters in 2023
As a copywriter who does a lot of freelance work, taxes are probably not your favorite task. There is more to worry about, such as looking for more writing gigs and working on client projects.
However, you still need to keep track of your taxes to ensure you do not end up with a huge tax bill that you did not anticipate. Luckily, there are several tax deductions you are entitled to that can help keep your tax bill low, including the three, which are mentioned below-
Home office tax deduction
If you are a copywriter who uses your home as your primary office for writing gigs, you are entitled to home office deductions. You can claim this deduction whether you rent or own the house. The best way to calculate the tax deduction is to multiply the square footage of your home office with the IRS prescribed rate.
Office supplies and expenses deductions
There are plenty of tax-deductible items under the office supplies and expenses categories for copywriters. They include the costs of buying software and AI tools that you need for your writing, domain name and hosting fees for your portfolio, and even home office equipment.
Professional development tax deductions
Professional development costs are deductible business expenses from your taxable income. These costs will include everything you spend to improve your copywriting skills, such as paying for online courses, buying books to read to improve your skills, and subscriptions to periodicals like Writers Digest.
2. 3 Tax Deductions for Developers in 2023
As a freelance developer, whether you are a programmer or coder, you need to know the self-employment tax deductions you are entitled to, so you can maximize your earnings as a freelancer. You will be happy to have this information when tax time comes, as it will save you money.
Software expenses
As a developer, you will require special software to do your job. What you spend on buying the software is a tax-deductible business expense that you can use to reduce your taxable income.
Membership and licenses
If you require a specific developer license to operate or your office needs a permit, what you spend to get it should be a self-employment tax deduction. Small business owners working as freelance developers should also deduct any expenses they incur to pay for memberships relevant to their profession.
Ongoing training
Developers need to undergo regular training to keep up with the changes in the industry, such as the development of new technologies. This training is essential to improve their skills or keep them relevant to the job, so these education expenses are tax-deductible.
3. 4 Tax Deductions for Designers in 2023
Freelance designers always have a lot to worry about, from looking for more contracts to meeting strict client deadlines.
The last thing you should have to worry about is getting a massive income tax bill at the end of the tax year simply because you did not take advantage of all your tax deductions.
Electronics
Electronics can be tricky to account for as business expenses since you will not need to buy them every tax year. However, as a designer, you should deduct the cost of computers and other electronic devices you need for your work. If you do not buy them yearly, their depreciation is a tax-deductible expense.
Sofware subscriptions
Graphic designers and those in other design niches will need subscriptions for software like Photoshop and business management software. They are all deductible when calculating income tax.
Website expenses
Designers need to maintain a website with a portfolio that showcases their work. Therefore, the website maintenance cost and others such as hosting are acceptable deductions when calculating your self-employment taxes.
Art supplies
Although many designers will rely on digital tools to do their work, sometimes it might be necessary to use physical art supplies. You will be able to deduct the cost of the supplies from your business income.
4. 3 Tax Deductions for Marketing Professionals in 2023
As a freelance marketing professional, you have to work hard every day to grow your business and establish yourself as an authority in the highly competitive industry.
One of the biggest challenges you are likely to face is filling out your tax forms, as you can end up paying high taxes if you do not take advantage of all your tax deductions.
Online services subscription
Many freelance marketing professionals have to subscribe to online services to get marketing software and other tools to run the business. These subscriptions are business expenses that you should deduct from your business income to reduce your taxes.
Conference fees
Marketers often need to attend trade shows and conferences when marketing or to interact with other players in the industry to grow their network. Any costs you incur to participate in these forums are tax-deductible business expenses.
Self-employment tax
Like other freelancers, marketers should deduct half of their self-employment taxes as a business expense when filing taxes.
5. 3 Tax Deductions for Translators in 2023
Translators play a crucial role in helping advertising firms and corporations create localized content that ensures a better connection with customers. As a translator, you should spend more time sharpening your skills and not worrying about taxes.
Business startup costs
If you are a new freelance translator, you will likely incur several costs to set up the business, such as renting an office and getting office supplies. These costs are deductible expenses that you can use to lower your tax bill.
Self-employment tax
Most freelancers are entitled to a self-employment tax deduction. You can deduct half your self-employment taxes when filling your form 1040 for Social Security and Medicare taxes. Unlike formally employed individuals, you do not have an employer to cover half of these taxes.
Travel expenses
If your freelance translator business involves some travel, you can calculate the travel expenses n deduct them from your business income.
6. 3 Tax Deductions for PR or Branding Freelancers in 2023
Whether you are a freelance PR or branding consultant, you should understand the importance of keeping business costs down, as sometimes the profit margin can be pretty thin. One way to do this is by making sure you claim all your tax return deductions.
Business operating expenses
Any business expenses you incur to keep your self-employed venture in operation are tax-deductible. Some of the operating costs branding and PR freelancers are likely to incur are paying independent contractor fees and license fees.
Home office deduction
Home office deduction is an excellent way to save money on your taxes if you work from home. All you have to do is calculate the space that your home office takes up and multiple this by the rate IRS provides.
Insurance premiums
Business insurance premiums are tax-deductible. PR and branding freelancers who pay health insurance premiums can also deduct them from their business income.
7. 3 Tax Deductions for Videographers in 2023
As a self-employed videographer, you have to keep track of every dollar you make so that you can know how much you have to pay in taxes. Additionally, you have to ensure you know all your tax deductions to save money and make the tax season less hectic for you.
Film and video production equipment
There is always new film or video equipment to buy as a professional videographer as technology changes fast. The good news is that everything you purchase for your business is a deductible during the tax season.
Computer-related items
Besides film and video equipment, you will still need various computer-related items to do your job, such as photo/video editing software like Adobe Creative Cloud. What you spend on this essential software is tax-deductible.
Travel expenses
Videographers often have to travel a lot to record raw video content or for other things like conferences. Make sure you deduct all the travel expenses you incur as they are job-related costs.
8. 3 Tax Deductions for HR Managers in 2023
As an HR manager, you can work both remotely and from a client's office, and it does not have to be a permanent position. Most businesses try to cut costs by hiring freelancers for this job.
Like any other freelancer, you will have an obligation to pay your self-employment tax and others like income taxes. You can make the burden more bearable with different self-employment tax deductions.
Professional association membership fees
Several HR professional associations are available in the USA, like Society for Human Resources Management, and joining them gives you more credibility as an HR manager. As a self-employed HR professional, any fees you incur to pay for these memberships are deductible from your taxable income.
Work-related training cost
If you take a new course or attend any other form of work-related training to sharpen your HR skills, you can deduct this from your business income.
Office supplies and expenses
Any expenses you incur to keep your office running, such as phone and internet service subscriptions, are tax-deductible expenses.
9. 3 Tax Deductions for Accountants in 2023
As a freelance accountant, you will not have any difficulties filing taxes. However, even if you are a tax professional, you still need to understand all your tax deductibles to save money. Understanding your deductions allows you to concentrate on helping others file their taxes.
Retirement contributions
Self-employed accountants also need to contribute to retirement plans like the SEP-IRA. The maximum contribution is 25% of your net earnings from your self-employed accountant job. If you contribute the maximum, you can save a lot in taxes.
Health insurance contributions
If you pay health insurance contributions for yourself, your spouse, and your dependents, you can deduct this from your business income. Provided you qualify, you can deduct up to 100% of your health insurance premiums.
Home office deduction
Freelancer accountants that work from can also enjoy home office deduction. All you have to do is calculate the space you use for your office at home and multiply this by the IRS office deduction rate to know how much to deduct.
10. 3 Tax Deductions for SEO Professionals in 2023
As an SEO professional, you should spend more time sharpening your skills on the core mandates of the job, like link building, keywords, and Google algorithms. However, you cannot do this if you keep worrying about your tax bill, but there is less to worry about if you make use of your tax deductions.
Home office deduction
If you work from home, the IRS will allow you to make a deduction for the space you use for your office, and as an SEO professional, you should take advantage of this to reduce your taxes.
Business software and tools
SEO professionals need several tools and software to do their job, and the majority are not free. They include keyword research tools like SEMrush and Ahrefs. Any fees you pay for these tools are tax-deductible.
Internet service subscriptions
Internet service is essential for your job as an SEO expert, and the subscription for the tax year can be pretty significant. Deducting it from your taxable income can help reduce your annual tax obligation.
Tax deductions are an excellent way to reduce your self-employment taxes. As a freelancer, you should take advantage of the deductions highlighted above as you file your return. However, it is essential to clarify that we are not offering tax advice. If you need any advice for your taxes, you should talk to a tax professional.
