Working in an unconventional manner, like those who do freelance work, has many perks. But for those perks to be valuable to you, you must be aware of them and take advantage of them when they’re available. Taxes, for example, work differently when you don’t have an employer. When you work as a freelancer, or gig worker, you may not be aware of the tax advantages of being self-employed. Tax laws are complicated, and they vary from state to state, but when it comes to federal income taxes, you can write off some of your business expenses, which can be extremely helpful to your financial situation.
Understanding tax write-offs
Gig workers are considered independent contractors, which means you have the option to write off many everyday expenses used while working. The key to doing it right is to keep records of these expenses. Expenses like cell phone bills, technology needed to complete your work, and paid-for apps that you regularly use during your workday can usually be written off. If you travel while working, you may be able to write off costs for car insurance and gas used. Take the time to consider what you utilize each day while working and keep records of the time used so you can accurately write off those expenses.
Ask for help to prevent errors
Not everything can be considered a work-related tax write-off. If you’re unsure of what is considered a legitimate work expense, you may want to work with a tax professional. Otherwise, you could face an audit if the IRS thinks you’re trying to write off illegitimate expenses. Audits are time-consuming and stressful so it’s always a good idea to seek advice if you have a question about your taxes.
When you’re self-employed and working freelance, you should always take advantage of the perks that are available to you. One of those perks is writing off your work expenses. Keep records of what you use when you’re working so you don’t have any issues if questions arise from the IRS. If you’re unsure of how best to take advantage of independent contractor tax write-offs, ask for help so you can make the right decisions that will best benefit your financial situation.