For most people, tax season can be a chore at the best of times, but for freelancers, taxes can be even more daunting of a task. Whereas working for an employer makes your expenses very clear-cut, the same cannot always be said for freelancers. Many freelancers work from home, and as such, it can be difficult to discern what can be legally considered as tax write-offs and other deductions.
One particular thing that concerns some freelancers is the amount of deductions they can receive on internet usage and electric bills. Regarding internet costs, you can typically write off some, if not all, of your internet usage. It is not feasible (or legal) for an auditor to scrutinise every megabyte of your data usage, so this can be a useful way of softening the blow come tax time.
Accountants are your friends, not your enemies. While some people dread seeing accountants, this should never be the case. The ultimate goal of an accounting firm is to save you (or your business) as much money as legally possible. After all, that's how accountants earn their living.
Another thing to consider is your tools. If you're a writer or someone who relies on a computer to do work-related tasks, keep your receipts or electronic transactions, as these can be used at the end of the financial year to streamline the accounting process. While purchases are commonly thought about, also remember that maintenance costs and repairs can also be used as deductions, for example, if you break your laptop screen or get a battery replaced.
Another big one is your phone bill. Some people on high-end plans can spend $100+ per month. If you regularly use your phone for work, you should be able to claim a large portion of this as a deduction. Similarly, like mentioned above, if your phone screen breaks, battery gets replaced, or you decide to pay for phone insurance, then you may be able to claim much of this back when you files your taxes.
Although there are many deductions, it is also important to ensure that you can collate your bank statements properly. Thankfully, the internet has made this process practically painless, and you can even print off statements for previous years if you've been slack. Ultimately, though, using an accountant during tax time is a great way take the stress out of accounting, allowing you to concentrate on your freelancing career!Share
21 December 2016
Hi, my name is Robert. For many years I worked for a large corporation, and my employer paid tax on my behalf. I knew that my tax money helped to keep the streets clean and roads repaired, but beyond that, I never gave it a second thought. However, a few years ago, I started work as a freelance graphic artist. I really enjoyed the freedom of being my own boss and setting my own hours, but I didn't like having to fill out my tax returns. I spent many hours learning about how the tax system works and the correct way of filing my tax returns and applying for rebates. I decided to start this blog so I could pass on my knowledge to other self-employed people who are confused by the tax system.