Five Tax Deductions Freelancers Overlook (And One They Make Up)
Home office, mileage, software... everyone knows those. But these five deductions are commonly missed by freelancers — and cost them real money.
Every freelancer knows about the big-ticket deductions. Home office. Mileage. The laptop that was definitely necessary. But the tax code is full of smaller deductions that quietly go unclaimed every year — and small deductions add up to real money by April. Here are five worth checking, plus one that doesn't exist.
1. Health insurance premiums
If you're self-employed and pay your own health insurance, those premiums — including dental and long-term care, within limits — may be deductible above the line, meaning you don't need to itemize to claim them. W-2 workers can't do this. You can. It's one of the best deductions in the code, and it's routinely forgotten by people who switched to freelancing recently.
2. Retirement contributions
Contributions to a SEP IRA or solo 401(k) reduce your taxable income dollar for dollar, and in most cases they also lower your self-employment tax bill. That's a double win: less income tax now, and a retirement account that's actually funded. If you're not contributing, you're paying extra tax and missing out on the growth. Both problems are solvable with one transfer.
3. Professional development
Courses, books, conferences, certifications — if they maintain or improve skills you use in your business, they're generally deductible. That includes the online course you bought and never finished. The IRS doesn't require you to finish it, just to have a business purpose. (Your conscience is a separate matter.)
4. Home office and phone, done right
The home office deduction requires regular and exclusive use — a corner of the dining room where the kids do homework doesn't count. But if you qualify, you can use the simplified method or actual expenses. Bonus: if your home office is your principal place of business, the drive to client meetings may count as deductible business mileage.
Your phone bill isn't deductible just because you own a phone. But the business percentage of it is — figure out what share of your usage is work-related and apply that to the bill. Same for home internet. It's not a huge number, but it's a legitimate one, and it's the deduction most freelancers simply forget to calculate.
The one they make up
“I heard you can deduct everything as a business expense.” No. Meals still need a business purpose, commuting from home to a regular office still isn't deductible, and that “client meeting” that was really dinner with your college roommate needs receipts and a reason. The IRS doesn't audit friendly. Claim what's real, document what you claim, and you'll sleep better than any deduction can buy.
Run through this list once a year, ideally before your tax appointment rather than during it. Your accountant will be impressed. Your tax bill will be smaller. That's the best kind of professional development.