3 Tax Deductions You Can't Claim as a Freelancer
There are many deductions you can claim as a freelance worker. But read on for a list of expenses that won't fly with the IRS.
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One of the benefits of being a freelance worker is getting to deduct different expenses on your taxes that relate to your work. For example, if you're a freelance graphic designer and you purchase a new monitor for your home office, that's generally a valid deduction -- assuming, of course, that you use that monitor for work purposes, as opposed to something like gaming in your spare time.
But there are certain deductions that freelancers might think are valid that actually aren't. Here are three such items that fall into that category.
1. Child care
If you're self-employed, you may need to pay for child care to get your job done. That's understandable. Unfortunately, child care is not an expense you can deduct on your taxes.
That said, if you pay for child care so you can work, you may be eligible for a tax credit known as the Child and Dependent Care Credit. The credit allows you to deduct a portion of your child care costs of up to $3,000 for a single child, or $6,000 for two or more children.
To be clear, though, you're only deducting a percentage of either $3,000 or $6,000, the exact amount of which will depend on your income and will range between 20% and 35%. You can consult this IRS publication to learn more about the credit and see how much money you're potentially eligible to deduct.
2. Pet care
Maybe you're someone who has to travel to see different clients as part of your line of work. In that case, you might have to pay for a cat sitter or dog walker.
Unfortunately, just as child care isn't a deduction you can claim on your taxes, so too does pet care not count. You can potentially deduct the cost of certain pet care items if you're, say, getting paid to write a review on them (though it would be best to check with an accountant to make sure). But you can't simply write off the cost of animal care that's needed in your absence.
3. Personal leisure on a business trip
Business travel is generally considered a deductible expense for tax purposes. If you pay to fly out to an industry conference and stay at a hotel, you can usually write off those costs, plus the cost of admission to the conference itself. And if you're traveling to see a client, your flight and lodging are similarly deductible, generally speaking.
But if you choose to go on an outing for your own enjoyment during a business trip, that's an expense you usually cannot deduct. So let's say you're a freelance consultant attending a conference that ends at noon on your final day, and your flight home isn't for another 10 hours. You may decide to go snorkeling for the afternoon, which you have every right to do. But you can't deduct the cost if you go by yourself and it's not a business-related outing.
Claiming invalid deductions on your tax return is a good way to get yourself audited. And that can be a hassle, even if your mistake is innocent.
To avoid that scenario, it could be a good idea to hire a tax professional to do your return if you're self-employed and have several deductions to claim. An accountant can tell you which deductions you can and cannot take, so you don't make any mistakes or lose out on refund dollars you're otherwise entitled to.
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