freelancing and money matters

you can also deduct various car-related expenses. figure out total mileage on your car for a year and document it (best was is to get an oil change close to Jan. 1 every year so you have the mileage on record). Then figure out what percentage of that mileage was used for work/freelance. You can deduct that percentage of all car-related expenses like oil changes, new tires, repairs, etc. I believe you can also deduct one car wash per month.

The more little things you can find overall, the better this will be for you. The home office thing is a big key. You can take off a percentage of heating and cooling and power and all that stuff, in addition to the mortage and all that, which was mentioned earlier.

 

The home-office thing is HUGE, but it's a double-edged sword . . . the IRS tends to scrutinize retuns that claim it, like hawks . . .
and exect at least one, "let's visit" letter from the IRS before they're satisfied you're fully-legit . . . and the keeping of good
records speaks for itself.

 

But you can't really do any/much of this if you're filing 1040 EZ, correct? Don't you need enough itemized deductions, i.e. house to file the regular 1040 in the first place before you start getting into home office, etc.? And the IRS worrying about any of this for anybody making less than about 100 K is ridiculous.

 

Can't claim itemized deductions on a 1040EZ.

Also, if you are going to claim actual vehicle expenses, rather than standard mileage, be prepared to have a lot of records to back that up.

And you can't shield income from taxes unless it's from something like a Roth IRA.

 

also, it's been a few years since i was getting money from freelancing, but i think you still need to have a real home office. your laptop on the kitchen table doesn't count. if you live in a small one bedroom apartment i assume you don't need actual walls but you need a specific space set aside to be designated as the "home office."

 

That's correct. It has to be a designated area because your deduction is based upon a percentage of space used for your home office. You actually have to report the square footage of your home office as a percent of your entire square footage. I suppose if you are a highly skilled interior designer, you could have a spacious office or move your office into a spacious area when the IRS man comes knocking. Now that I think about, I think I'm going to kick my son into a hall closet and swipe his bedroom.

 

If the IRS man comes knocking, don't let him in to see what you exaggerated. It's not the same as someone serving a warrant, unless he has federal agents with him.

Then find an enrolled agent to represent you at an audit.

 

I was audited once...about four years ago...five minutes into the interview, the agent looks at my stuff and says "I don't know why we asked you in here." Went through with it anyway, and it actually proved to be quite informative...