5 Essential Tax Deductions for Freelancers

As a freelancer, understanding tax deductions is crucial for maximizing your income. Here are five essential deductions you should be aware of:

1. Home Office Deduction

If you use part of your home regularly and exclusively for business, you may qualify for the home office deduction. You can deduct expenses related to the business use of your home, including mortgage interest, insurance, utilities, repairs, and depreciation.

2. Health Insurance Premiums

Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and their dependents. This includes medical, dental, and qualified long-term care insurance.

3. Business Travel Expenses

When you travel for business purposes, you can deduct expenses such as airfare, hotel stays, rental cars, and 50% of your meal costs. Keep detailed records of your business trips to substantiate these deductions.

4. Retirement Plan Contributions

Contributions to retirement plans like SEP IRAs, SIMPLE IRAs, or solo 401(k)s are tax-deductible, allowing you to save for retirement while reducing your taxable income.

5. Business Insurance Premiums

Premiums paid for business insurance policies, including liability insurance, professional malpractice insurance, and business property insurance, are generally deductible as business expenses.

Remember to keep detailed records and receipts for all deductible expenses. Consider working with a tax professional to ensure you're claiming all the deductions you're entitled to.