FREELANCERS UNION BLOG

  • Finance, Advice

Tax Deduction Tips from an Expert – and a Freelancer

Howard Samuels, CPA MST, is a member who regularly presents at Freelancers Union seminars, including the upcoming February 1 seminar, “Tax Deductions and Quarterly Payments.” As a freelancer receiving untaxed income, there are a lot of deductions you could qualify for that you might not be aware of, so here are a few tips to keep in mind: While meals and entertainment with clients or colleagues outside of your office are generally 50% deductible (due to the personal benefit you get from them), meals are 100% deductible if they’re actually “working meals” – meaning you and business clients or colleagues ate a meal in the office while working. For example, if you eat in a restaurant with a client to discuss business, the meal is 50% deductible, but if you order food for colleagues when working late on a project, the meal is 100% deductible. Don’t get carried away, since the IRS is not going to allow you to deduct lunch every day. Business travel expenses (airfare, lodging, taxis, subways, and rental cars) are 100% deductible, but commuting (travel from home to your first place of business and back home from your last place of business) is not. If your trip was part pleasure and part business, prorate expenses on a reasonable basis (the hours or days you worked during the total trip). If you primarily do your work at home, then you can claim a home office deduction for part of your rent, mortgage, utilities, and insurance. If you have another place to work and choose to work at home for your convenience, no go on the home office. The deduction is based on the percentage of square footage of your business area to square footage of your entire apartment or house. If you share your place with someone other than your spouse, then you can prorate the square footage of the entire place accordingly to represent your portion. Health insurance can be a small fortune for the self-employed, but the good news is that as long as your business is profitable, your insurance is 100% deductible. This is an “above the line” deduction, deducted on page one of the tax return. This includes what you pay for COBRA if you recently left your job. Some final words of wisdom on record keeping in case of an IRS audit: remember to save receipts and invoices for the actual purchase and save a proof of payment (cancelled checks, bank statement with debit charges, or credit card bill). Good luck! Howard is the Tax Managing Partner in KDMS LLC, a certified public accounting firm providing accounting, bookkeeping, and tax services for individuals and small- to medium-sized businesses. Howard has a master's degree in Taxation from Pace University and holds his undergraduate degree in accounting from Syracuse University. Howard has been practicing accounting and tax for 22 years and has offices in NYC and NJ.

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