I was always a full time employee. Last year in 2020 I started freelancing, which means I will have to file my taxes with 1099 this year. What can I write off a as a freelance designer vs. full-time hire? Never filed taxes as a freelance. Any advice will help.
Best would be to speak with the person who is going to do your taxes as things may have changed with new Trump tax laws. Normally it would be everything related to your freelancing: Commuting expense, materials used, home internet usage and cell phone usage.
If you’re going to continue to freelance this year, you should maybe think of opening an LLC and your clients cut the check to your LLC instead. Again a tax professional should be able to tell you the pros and cons of an LLC or 1099.
I use to do taxes part time for extra money and I can tell you it depends on the state that you live in. The federal laws that changed for small businesses making under a certain amount of profit make it so you get very little back. Try the below link for IRS.gov for free info. If your willing to pay $50-75 you can try HR Block tax pro online or in office. Its worth it if you fill out your tax forms online with any platform and bring them into a HR Block office. It refund season!!!
https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses
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It all depends if you work from home is a % of your rent and utilities
if you drive to your customers your miles and maybe your car payments and repairs
if you have storage, and maybe a % of what you spend on clothing and self-care to look presentable when visiting customers. also all the supplies, tools, and software, memberships you use to do your work. Also, there are many apps that can help you with this such as keeper tax and self-employed from QuickBooks all you do is connect your bank and the app will track everything
I hope this helps
Hi! All of the above are correct statements. If you use a portion of your home EXCLUSIVELY for business, then you may deduct the portion of your rent (Or mortgage/home expenses/ heat/ taxes) that reflects the square footage of that space as a percentage of the total, a portion of your cell phone, electricity, and internet access, any publications that you pay for, travel expenses to your clients, supplies, subscriptions such as to the Adobe Suite, tax preparation, 50% of business entertainment and gifts, and office expenses (such as printer ink). With the new tax law, you will deduct these expenses from your gross receipt, and then 20% of this amount is considered not taxable. So, 80% of your net profit is taxable. One must pay social security taxes on your income, if your salaried job did not pay you more than the SS cap. It is wise to hire an accountant. They will advise you on the benefits of an LLC, an S corp or simple 1099. Good luck! A
And I do hope that you paid quarterly estimated taxes.
Sorry I forgot to add any tuition costs for classes that you took to improve your skill set for your job are deductible.
I don’t know if this has changed with the Trump tax revisions but a few years ago my CPA had told me that you need a separate room in order to take a tax deduction on your rent. The IRS makes an exception in Manhattan* but it is a red flag for them. If you decide to deduct the work space, photograph the area and deduct the square footage.
- Im not sure if this would apply to other parts of NYC