What business expenses can I write off?

Okay, let's break down deductible business expenses for freelancers/1099 workers. The goal is to reduce your taxable income! Here’s a comprehensive, yet concise, list:

**Key Principle: Ordinary & Necessary** - Expenses must be *ordinary* (common in your industry) and *necessary* (helpful and appropriate for your business).

Here's a breakdown by category:

* **Home Office Deduction:** If you *exclusively* and *regularly* use a portion of your home for business, you can deduct a percentage of mortgage/rent, utilities, insurance, etc.

* *Example:* You dedicate a spare bedroom solely to client meetings and bookkeeping. You can deduct a portion of your rent/mortgage based on the square footage of that room compared to your total home square footage.

* **Business Use of Car:** You can deduct actual expenses (gas, repairs, insurance, depreciation) *or* take the standard mileage rate (67 cents/mile for 2024). Keep excellent mileage logs!

* *Example:* Driving 5,000 miles for client visits. At 67 cents/mile, that's a $3,350 deduction.

* **Supplies:** Office supplies, software, postage, etc.

* *Example:* Pens, paper, Zoom subscription.

* **Equipment:** Computers, printers, furniture (depreciated over time *or* Section 179 deduction for immediate write-off – subject to limits).

* *Example:* $2,000 laptop – you might be able to deduct the entire $2,000 in the year of purchase using Section 179.

* **Education:** Courses *improving skills in your current business* are deductible. Not deductible if it qualifies you for a *new* trade or business.

* *Example:* A graphic designer taking a Photoshop class. Deductible! A teacher going to medical school? Not deductible.

* **Insurance:** Business liability, professional indemnity, health insurance premiums (potentially deductible, with limitations – see below).

* **Professional Fees:** Accountant, lawyer, consultants.

* **Marketing & Advertising:** Website costs, business cards, online ads.

* **Bank Fees:** Fees directly related to your business bank account.

* **Internet & Phone:** The *business portion* of these expenses.

* *Example:* If you use your internet 50% for business, you can deduct 50% of the cost.

* **Health Insurance Premiums:** Self-employed individuals can generally deduct health insurance premiums for themselves, their spouse, and dependents. *This deduction is limited to your net profit from self-employment.*

* **Qualified Business Income (QBI) Deduction:** Potentially deduct up to 20% of your qualified business income. This is a complex deduction – professional advice is highly recommended.

**Recordkeeping is CRUCIAL.** Keep receipts, invoices, and detailed records to support your deductions. Use accounting software or a spreadsheet.

⚠️ Disclaimer: This is for educational purposes only. Always consult a licensed CPA for personalized advice.