April is often a dreaded month for freelancers across the land.
Taxes are due, and a mountainous pile of paper receipts will document (hopefully) how little you really owe the taxation arm of our federal government. Oh, and maybe your state, too. That is if you made sure to drop every single little sheet of paper into the said pile. Oh, the horror that is this annual occurrence!
By leveraging a few of the best copywriting resources, you can be better prepared for next April and minimize the number of dollars you need to hand over to the tax man.
Addition Through Subtraction: Maximize your Deductions
The fruits of your freelancing labor have resulted in a bountiful revenue stream throughout the entire year. But how can you minimize your exposure to taxation?
The answer is through careful attention to deductions and keeping track of all of your expenses over the previous twelve months. By subtracting those deductions, you are preserving your revenue and lowering the amount you have to fork over to the feds and state.
“What exactly can I take off of my taxes?” is a very common question from freelancers, especially those new to our profession. Some of the most commonly overlooked deductions are the ones that might seem the most obvious.
Pretty much everything you touch throughout your working day can be deducted. If you purchased something to help you with your freelance career, you should deduct it.
Supplies and equipment are commonly overlooked, such as:
- business computers
- cell phones
- recording equipment
- other hardware and vital copywriting resources,
All hardware you purchased last year should be accounted for when you file in April.
As a professional freelancer, a website is one of the best copywriting resources you can have.
Hosting expenses add up, as well as premium themes and templates for HubSpot and WordPress platforms. Keep track of these monthly or annual charges! The marketing and advertising expenses for your website can likely be deducted as well.
If your assignments involve driving, you can always use the mileage as a deduction.
There are actual costs of the vehicle as one method of deduction, or you may just use the Internal Revenue Service’s standard mileage deduction for the actual miles traveled in the automobile (in 2023, the standard mileage deduction is 65.5 cents per mile).
As Jan Whitten, an accountant who has assisted freelance copywriters with their taxes for years recommends, “Usually the standard mileage deduction is better for freelancers.”
This process is often easier and more streamlined. So be sure to track the miles you drive when heading off for your next interview.
Professional memberships and continuing education are other examples to consider as you think about what you can deduct from the income of your copywriting jobs.
Are you taking an online course on how to better use Canva, or paying for webinars on Best SEO Practices? Pretty much any copywriting resources that you are paying for to learn how to expand your business should be considered deductible.
Are you traveling to a professional conference focused on copywriting? The conference registration, airfare, lodging, and meals can all be considered professional development expenses, and will most likely be deductible. Make sure to keep track of every cup of Starbucks you purchase during the conference as receipts and documentation are key components of the process.
With so many writers working remotely, a home office is often deducted from taxes.
And it is possible to deduct these expenses whether you rent or own your home. One caveat: the space in your house that you set aside as an office must meet the requirement of only being used for business. As a simple rule, up to $1,500 a year can be deducted for a 300 sq. ft., designated office space.
Keep in mind that the Internal Revenue Service is beginning to scrutinize these home office deductions much more closely.
Some other common deductions you won’t want to overlook as you prepare for tax season:
- Office expenses: Costs related to setting up your home office, such as furniture, office supplies, and associated equipment, can often be deducted.
- Professional fees: Fees paid to an accountant, lawyer, or other professional for services related to your copywriting business can be deducted.
- Business travel expenses: Costs related to travel for business, such as airfare, hotels, meals, and car rental, are deductible. Are you meeting with a potential client? Deduct the expenses associated with that initial meeting!
- Advertising and promotion: Costs related to marketing your copywriting services, such as business cards, flyers, postcards, and other promotional materials, can be deducted.
- Education and training: Costs related to books, seminars, and other educational or training materials used to advance your copywriting career can be deducted.
- Software and subscriptions: Costs related to software and subscriptions for services such as grammar and plagiarism checking, writing tools, journals, periodicals, and even research services can be deducted.
How Much Should I Save for Taxes?
One of the best copywriting resources is the fluidity of cash flow.
Unfortunately, our federal government would like a chunk of your financial windfall. As a rule of thumb, when first starting your freelancing career, you should be planning on putting away 25-30% to satiate the taxing authorities. Once you have been in the game for a few years, you’ll have a better idea of your exposure to taxation and be able to fiddle with the figure.
As Whitten recommends, “The biggest thing you can do is be organized.”
Organizing deductions can seem like a gargantuan task, but by leveraging some of the best copywriting resources, you can systemize this process and make it accessible to your working lifestyle.
The easiest is a spreadsheet from Excel (try the basic business template) or Google Sheets and these tools will certainly do the job. There are also tax-based apps like Quickbooks, Xero, Turbo Books, and Zoho Books. Many of these platforms are incorporating ChatGPT technology into their systems, making asking questions about specific concerns much more intuitive and simpler. But you don’t need a separate, subscription-based platform to organize your business papers.
As Whitten suggests, “I recommend having a separate bank account that you only use for business items, all the income will go into that account, all your expenses can come out of that account, and that way everything is all in one place and only in one place.”
Wondering how much of your freelancing income is exposed to taxation?
This is a very common copywriting concern. What should you be taxed on? In short – everything! Technically, any work with a client for less than $400 in that year does not need to be reported, but be careful with too many exceptions! If you make $600 or more from one employer, they should issue you a 1099 form for your taxes.
Ultimately, you may want to hire a professional to help you prepare your tax return. If possible, a professional with experience assisting other freelancers is preferred, but ultimately, it should be a person that you can trust.
Check out more of our best copywriting resources at the Copywriter Exchange. Find tips, webinars, courses, and other deliverables that will help you land the right copywriting jobs and continue to grow your freelancing career! You can also view a webinar that answers all of the tax deductions questions you have.
Doug Kenck-Crispin is a podcaster and freelance writer in Portland, Oregon. He pens features for newspapers and magazines, long reads, website copy, landing pages, email campaigns and other marketing mediums. You can find more about Doug on Linkedin, Twitter, or his website.
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