Hyden, Miron & Foster, PLLC Law Blog

Wednesday, August 10, 2016

Tax Tips for Freelancers and “Gig” Workers

What tax deductions can I take as a freelance employee?

Millions of Americans today are self-employed, engaging in freelance or so-called “gig” work.  Our economy has been termed a “gig economy” because so many Americans are working multiple short-term jobs or single projects, often connected to their employers through websites and mobile applications.  Freelancers typically receive a 1099 form that summarizes their earned income.  According to the IRS, there were over 91 million 1099 forms issued across the country last year, the highest number on record. 

Filing taxes as a freelancer can be complicated as you may be dealing with numerous 1099 forms and likely have questions about deductions.  Here are some tips that can give you a jump start for next year’s tax season:

  1. Get organized: Save all of your receipts in a safe location or scan them to your computer.  Take pictures to support your claimed deductions and write down the purpose of business trips or related expenses. 
  2. Report all earned income:  Even if you do not receive a 1099 or another tax form, it is important to report all of your income.  Failure to do so could result in penalties later on.
  3. Take advantage of deductions:  1099 employees are often able to take tax deductions that a W-2 employee could not.  As a general rule, freelancers and self-employed persons can deduct for expenses that fall into the following three categories:
    • Things related to the exclusive business use of the place where your business operates;
    • Things you use exclusively in operating your business; and
    • Things you eat during the course of doing business.

Freelance employees are often surprised to learn that they can deduct for their home office, utilities, travel, gas mileage, computer purchases, professional development, advertising and marketing, and more, depending on the nature of their business.  Given the complexities surrounding tax deductions and claimed income, freelancers are advised to consult with an experienced tax law attorney.  Contact the Arkansas tax law attorneys at Hyden, Miron & Foster, PLLC today by calling (501) 482-1787 or (888) 770-1848.


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