• Skip to primary navigation
  • Skip to main content
Good Financial Cents®
Content is based on in-depth research & analysis. Opinions are our own. We may earn a commission when you click or make a purchase from links on our site. Learn more.
  • Make Money
    • Get Money Now
      • Ultimate Guide to Making Money
      • Need Money Now
      • Get Free Money Fast
      • Make Money Fast
      • Make $1K Per Month
      • Make $100 Per Day
    • Control Your Destiny
      • Self Employed Jobs
      • Make Money from Home
      • Hobbies That Make Money
      • How to Become a Freelance Writer
      • Small Business Ideas to Start
      • How to Become an Independent Contractor
      • Best Online Jobs
    • Passive Income
      • Passive Income Ideas
      • Multiple Streams of Income
      • Extra Income
      • Residual Income Ideas
      • Learn to Sell e-Books
      • Make Money on Facebook
      • Make Money on Tiktok
      • Best Online Survey Sites to Make Money
    • Explore More
      • Best Side Hustle Ideas
      • Make Money for Teens
      • Best Online Colleges
      • Best Jobs No College Degree
      • Become a Millionaire
      • Careers for the Future
  • Manage Money
    • Best Of
      • Budgeting Tools
      • Personal Finance Software
      • Best Cashback Cards
    • Company Reviews
      • Personal Capital vs Mint
      • Personal Capital Review
      • SmartAsset Review
    • Guides
      • Buy or Lease a Car
      • What is Liquid Net Worth?
      • Setting Financial Goals
      • How to Budget
      • Ways to Save Money
    • Explore More
      • How Much Car Can I Afford?
      • Best Auto Refinance Companies
  • Invest
    • Best Of
      • Best Short and Long-Term Investments
      • Best Low Risk Investments
      • Best Online Stock Brokers
      • Best Crypto Exchanges
      • Best Short Term Investments
      • Best Long Term Investments
      • Best Trading Platforms
      • Best Investment Apps
    • Company Reviews
      • Lending Club
      • Robinhood
      • M1 Finance
      • Ally
      • TD Ameritrade
      • Fundrise
      • Betterment
      • Etrade
      • Wealthfront
    • Guides
      • Investing for Beginners
      • Investing Small Amounts of Money
      • Investing in Real Estate
      • No Money Down Real Estate
      • Bonds vs Stocks
      • Peer to Peer Lending
      • Best Hedges Against Inflation
      • Safe Bitcoin Investing in 2023
    • Explore More
      • Bitcoin vs. Real Estate
      • Betterment vs Wealthfront
      • Investing for College Students
      • Stock Market Alternatives
    • By Investment Amount
      • How to Invest $100
      • How to Invest $1K
      • How to Invest $2k-$3k
      • How to Invest $5K
      • How to Invest $10K
      • How to Invest $15k
      • How to Invest $20K
      • How to Invest $30k
      • How to Invest $50K
      • How to Invest $100K
      • How to Invest $200K
      • How to Invest $500K
      • How to Invest $1M
  • Taxes
    • Best Of
      • Best Tax Relief Companies
      • Best Tax Software
    • Guides
      • Federal Income Tax Guide 2023
      • Taxes and Cryptocurrency
      • How to Do Your Own Taxes
      • How to Invest Your Tax Refund
      • Hiring a Professional Tax Preparer
      • Tax Tips for Freelancers
    • Company Reviews
      • TurboTax Review
      • H&R Block Review
      • Taxslayer
      • Tax Act
  • Insurance
    • Best Of
      • Best Life Insurance
      • Best Home Insurance
      • Best Auto Insurance
      • Cheap Term Life Insurance
      • Car Insurance For Young Adults
    • Guides
      • Term vs Whole Life
      • Different Types of Car Insurance
      • Average Cost of Car Insurance
    • Explore More
      • Life Insurance Over 50
      • Life Insurance Over 80
      • $1 Million Life Insurance
      • $2 Million Life Insurance
      • $3 Million Life Insurance
    • Company Reviews
      • Banner Life Insurance
      • Ladder Life Insurance
      • Health IQ
      • Haven Life
      • Policygenius
      • State Farm Auto Insurance Review
  • Retirement
    • Roth IRA
      • Best Places to Open a Roth IRA
      • Best Investments for Roth IRA
      • 7 Roth IRA Secrets
      • Roth IRA Conversion Guide
      • Roth IRA Rules
      • Roth IRA vs Roth 401k
      • Are Roth IRA Contributions Tax Deductible?
    • 401(k)
      • 401(k) Limits
      • 401(k) to Roth Rollover
      • Is 401(k) Enough for Retirement?
      • Maxed Out 401(k): What's next?
    • Traditional IRA
      • Traditional IRA Rules and Limits
      • Traditional IRA vs. 401(k)
      • Simple IRA Rules
      • SEP IRA Rules
      • How Much Do You Need to Start an IRA?
    • Explore More
      • SEP IRA vs. Roth IRA
      • 457 Plan for Successful Retirement
      • 401a Rollover Rules
      • How to Retire at 50
      • How to Retire at 55
  • Banking
    • Best Of
      • Best National Banks
      • Best High-Yield Savings Accounts
      • Best Checking Accounts
      • Best Savings Accounts
      • Best CD Rates
      • Best Money Market Accounts
    • Company Reviews
      • BBVA
      • Synchrony
      • Wells Fargo
    • Explore More
      • 9 Banking Alternatives for 2023
      • What is a Credit Union?
  • Home
    • Best Of
      • Best Mortgage Lenders
      • Best Mortgage Refinance Companies
      • Best Home Warranties
      • Best Homeowners Insurance
      • Best VA Loans
      • Best Mortgage Rates
      • Best Moving Companies
      • Best Home Security
    • Guides
      • Home Buying Checklist
      • Online Home Appraisal
      • How Much House Can I Afford?
      • First-time Homebuyer Programs
      • How to Get Approved for a Home Loan
      • Save Money When Building a House
      • How to Save for a Downpayment
      • When to Refinance Your Mortgage
    • Explore More
      • 15 vs. 30-year Mortgage
      • Home Warranty vs. Home Insurance
      • Veterans United Home Loan Review
      • Quicken Loans Review
      • HELOC vs Second Mortgage
      • DCU Mortgage Review
      • Costco Mortgage Program Review
      • USAA Mortgage Loan Review
  • Credit
    • Best Of
      • Best Credit Repair Companies
      • Best ID Theft Protection Services
      • Best Credit Report Options
      • Best Bad Credit Loans
    • Guides
      • How to Build Your Credit Score
      • How to Raise Your Credit Score in 5 Months
      • How to Dispute Your Credit Report
      • Hot to Remove Collections from Your Credit Reports
      • How Identity Theft Destroys Your Credit Score
    • Explore More
      • What is a Good Credit Score?
      • What is a Bad Credit Score?
  • Debt
    • Best Of
      • Best Debt Consolidation Loans
      • Best Personal Loans
      • Best Student Loans
      • Best Student Loan Refinance
    • Guides
      • What is Debt Consolidation?
      • How to Get Out of Debt
      • How to Get a Personal Loan Approved
      • How to Pay Off Student Loans Faster
      • Should I Consolidate My Debts?
      • Should I File for Bankruptcy?
    • Company Reviews
      • Credible
      • Sofi

Tax Tips for Freelancers

https://secure.gravatar.com/avatar/e878b08dfe07ff62f455e703bd7b6342?s=100&d=mm&r=g
  • Written By:
    Miranda Marquit

    Miranda Marquit

    Miranda writes for several web sites and specializes topics related to finance, investing, and entrepreneurship. She has been mentioned in...

    Read More
  • Updated: September 7, 2021
  • 3 Min Read
  • Advertising Disclosure

    Advertising Disclosure

    GoodFinancialCents® has an advertising relationship with the companies included on this page. All of our content is based on objective analysis, and the opinions are our own. For more information, please check out our full disclaimer and complete list of partners.

Quality Verified THE GFC® PROMISE
shield check icon
Quality Verified

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

shield check icon
Why You Can Trust GoodFinancialCents®

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Tax season has just come to an end, but that doesn’t mean you shouldn’t be preparing for next year. In fact, if you organize yourself throughout the year, you will have less work to do next year, and you will be more likely to plan for credits and deductions that can help you reduce your tax liability. (Of course, before you make any tax moves, you should consult a tax professional who can help you determine what might be best for your situation.) If you are a freelancer, it is especially important that you consider your tax situation, and remain organized throughout the year. Here are some tax tips for freelancers to consider:

Separate Business from Personal

The first thing you have to do as a freelancer, whether you are a sole proprietor, or whether you set up some sort of a business (LLC or S-Corp.), is recognize the difference between business and personal. If you want to deduct something as a business expense on your taxes, you had better make sure that it is, in fact, a business expense. If you are using it for something else part of the time, it is not a business expense. One of the few exceptions to this real is your Internet service, in which case you can estimate how much of the Internet time in your home is used for business activities and use that percentage to figure your business expense related to online use.

It is a good idea to open a separate account for business purposes. Some banks won’t let you open a business account unless you are a registered as a business organization. But, even if you are a sole proprietor, you can open a second personal account and use that for your business activities. Even if you use your freelancing as your income, it is a good idea to have your freelance earnings deposited first into the account you designate for business, and then move the money (by writing a check or some other transfer) into your personal account. Make business purchases for supplies, travel and other business expenses, using your business account, and do not make personal purchases using your business account.

Keeping all of this separate will show that you are conscientious, and if an IRS audit does happen, it will be easier to document your business expenses.

Use Financial Software

One of the best ways to get organized is to use financial software. Most financial software programs allow you to keep track of multiple accounts. You can use the financial software to track how you move money from your business account into your personal account, and you can use category tags to help you keep track of specific expenses, making your Schedule C form easier to fill out. Here are the most common expense categories that freelancers come across, as listed on Schedule C (which you use if you are a sole proprietorship — if you are an S-Corp. or LLC, you will use another form):

  • Advertising
  • Insurance (not health)
  • Legal and professional services
  • Supplies
  • Travel
  • Utilities
  • Repairs and maintenance
  • Other Expenses

There are other categories on Schedule C; look over them and set up the expense categories on your financial software to correspond with what’s on the tax forms. Note that health insurance premiums can be deducted above the line on the front of your Form 1040, if you are paying for individual insurance yourself. (If you are reporting a net profit of zero or a loss, you will have to itemize your health insurance premiums instead of using line 31.)

Keep Documentation in One Place

Have a specific file for business expenses. Keep receipts and other documentation in this file, keeping it all together, throughout the year. If you write reviews, and bought a movie ticket, make sure to keep the receipt, and then print out a copy of the review to show that you did use the experience as part of your freelance work. The same rules apply for conference attendance and related expenses. Make sure that you have something to back up the receipt.

Keeping your business expense documentation in one file makes it easy to retrieve it at tax time, and it will help you keep an eye out for proper deductions. When your tax return is filed, keep your documentation with your copy of your tax return. I like to put it all in one large manila envelope labeled with the tax year.

This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

*Please consult tax advisor for advice on specific situations.

Facebook LinkedIn Twitter

About the Author

Miranda writes for several web sites and specializes topics related to finance, investing, and entrepreneurship. She has been mentioned in numerous media. Her blog is Planting Money Seeds

You Might Also Enjoy

$25-an-Hour Is How Much a Year? (Plus Budgeting and Side Hustle Tips)

$25-an-Hour Is How Much a Year? (Plus Budgeting and Side Hustle Tips)

The Top 15 Highest Paying Jobs in Consumer Services

The Top 15 Highest Paying Jobs in Consumer Services

Top 15 Highest Paying Jobs for 15-Year-Olds

Top 15 Highest Paying Jobs for 15-Year-Olds

The 10 Best Residual Income Ideas for You to Try

The 10 Best Residual Income Ideas for You to Try

17 Best Online Jobs for Teens in 2023

17 Best Online Jobs for Teens in 2023

37 Best Side Hustle Ideas for 2023

37 Best Side Hustle Ideas for 2023

  • Make Money
  • Manage Money
  • Invest
  • Taxes
  • Insurance
  • Retirement
  • Banking
  • Home
  • Credit
  • Debt
  • About
  • Contact
  • Facebook LinkedIn Twitter

© 2023 Good Financial Cents®. All Rights Reserved. | Privacy Policy | Disclaimer

All written content on this site is for information purposes only. Opinions expressed herein are solely those of AWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

All third party trademarks, including logos and icons, referenced in this website, are the property of their respective owners. Unless otherwise indicated, the use of third party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between Good Financial Cents® and the owners of those trademarks. Any reference in this website to third party trademarks is to identify the corresponding third party goods and/or services.