What items can I claim as tax deduction for my freelance web and graphics work?
Image taken on 2005-05-14 12:22:52 by Erik R. Bishoff.
And I work full-time job to supplement my freelance income. Can I claim a tax deduction on your new computer? I need a new computer.
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February 8th, 2010 at 1:25 pm
Any reasonable and necessary out-of-pocket expenses directly related to the production of taxable income are deductible. If you use the computer exclusively for business it is deductible.
Other things that you may be able to deduct:
Any software that you use exclusively for business.
Office supplies related to the business.
Bank charges related to the business. Keep your business finances separate from your personal ones!
Home office deduction if you have set aside a portion of your home for exclusive business use. Be careful here as it is an audit flag. See IRS Pub 587 for more information: http://www.irs.gov/pub/irs-pdf/p587.pdf
Phone line exclusively used for business use. This MUST be a second line; otherwise you may only deduct long distance charges, if any.
Internet connection used exclusively for business. This generally must be a second connection, however if you purchase a business internet service you can generally deduct the difference in cost between the cheaper home user service and the more expensive business service.
Here’s a link to the IRS Small Business & Self Employed Tax Center: http://www.irs.gov/businesses/small/index.html There’s a wealth of information there.
February 8th, 2010 at 1:40 pm
You are self employed or independent contractor. You will report your income and expenses on schedule C or C-EZ (Form 1040). This income is subject to SE tax at 15.3%. Read about self employed (or independent contractor) tax filing and payment of estimated taxes: http://taxipay.blogspot.com/2008/04/tax-filing-by-self-employed-sole.html