If you have worked a standard, contracted job for many years and then make the switch to freelancing, one of the hardest changes to deal with is self-employment tax and the ways in which it differs from the income tax you pay as an employee.
This is true both for the UK and the US—although we have more experience with the UK system. But if you are shrewd or hire someone who is, then you can claim a lot of tax back, saving yourself a fortune at the end of the year.
Here are some surprising things that you can claim on your taxes as a freelance writer.
You will be tasked with conducting research as an author and a freelance writer. You spend most of your time researching and that research usually only involves time.
But there are projects that require you to buy books and even to see events. Some authors claim vacations, simply making sure that they do something work related on that vacation, and the majority will claim TV subscriptions.
It sounds crazy, but if you write reviews for movies or TV shows, you write prediction/news articles on sports games, or you simply blog about the latest TV trends, then you need those subscriptions for your job and that, by default, means you can claim them on your tax return.
You should be able to claim back any money that you pay to other freelancers. It’s all part of the same job, and every penny you pay someone else can be deducted from your taxes at the end of the year.
Outsourcing can be a pain in the ass, as you have to rely on someone else to do a job and if they fail, it’s you who will get the flak. But this is also true for any developers, editors and artists you hire, whether because they are working on your website, helping you with one of your paid projects, or putting together a content website for you.
Most freelancers have some other projects on the go, including content websites, blogs and even companies. All of this can be expensive, but as it’s all part of your business it can all be claimed. Of course, any profits you make with that business have to be reported and you have to pay tax on them, but in the beginning, when you’re just getting setup, being able to claim those expenses back on your taxes can be a huge help.
This includes any money you spend on domains and web hosting fees, as well as any money you pay a developer to set things up for you.
Whether you’re marketing yourself as freelance writer or you’re marketing a writing business or some other connected project, you can claim that money back. Marketing is one of the biggest expenses for authors. PR doesn’t come cheap. But this is also true even if you’re just a freelancer looking to spend some money on Google or Facebook ads in order to get your services in front of more business.
And if you’re not already doing this, then you should. The fact that you can claim any marketing fees on your taxes makes it worth your while.
If you have a car and you use this to travel to places essential for your work, whether that be to far away location to do research, or closer ones simply to allow you to buy supplies, then you may be able to claim some of your gas, insurance, and even the car purchase (although probably not all of it.)
Travel expenses like this are actually some of the most commonly claimed expenses for self-employed and contracted individuals. There are companies that compensate the injured worker for mileage and travel, and plenty of self-employed individuals who claim large amounts even though they work from home all day.