{"id":45938,"date":"2018-04-10T09:00:41","date_gmt":"2018-04-10T13:00:41","guid":{"rendered":"https:\/\/www.adorama.com\/alc\/?p=45938"},"modified":"2018-04-10T09:15:59","modified_gmt":"2018-04-10T13:15:59","slug":"grow-your-freelance-business-deductions-for-the-win","status":"publish","type":"post","link":"https:\/\/www.adorama.com\/alc\/grow-your-freelance-business-deductions-for-the-win\/","title":{"rendered":"Grow Your Freelance Business: Deductions for the Win"},"content":{"rendered":"

\u201cWho loves paying taxes?\u201d<\/span><\/p>\n

We like to ask that during Terms & Conditions<\/span><\/a> workshops. Unsurprisingly, no one raises their hands. Unfortunately, the follow-up question generates the same result. <\/span><\/p>\n

\u201cWho knows how to avoid paying extra taxes?\u201d <\/span><\/p>\n

Again, no hands go up.<\/span><\/p>\n

In our last blog<\/a>, we talked about being in control of money through budgeting. Having a budget in place is an excellent way to save money. Now, we want to help you get the most out of your hard-earned cash. As creatives and freelancers, we can do this through claiming certain deductions <\/b>on our annual tax returns.<\/span><\/p>\n

You can get the most out of tax deductions by capitalizing on each category to the fullest extent. But for deductions to work in your favor, you must substantiate them<\/i>. Simply put: be sure to keep good records of business expenses. We can\u2019t stress how important it is to keep records on the deductions you claim. If you do it right, you will save thousands of dollars. And who doesn\u2019t like saving money? <\/span><\/p>\n

Business deductions<\/b><\/span><\/h3>\n

Deductions fall into two categories: itemized<\/b> and business<\/b>. (For this blog, we\u2019ll be focusing on business deductions. Itemized<\/b> deductions are deductible expenses that an individual can claim on his or her federal income tax returns. Business<\/b> deductions are exactly as they sound: they\u2019re deductible expenses related to your business.)<\/span><\/p>\n

In Publication 529, the <\/span>IRS classifies business deductions into two categories: ordinary<\/b> and necessary<\/b>:<\/span><\/p>\n

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  1. \n
      \n
    1. \u201cAn ordinary<\/b> expense<\/b> is one that is common and accepted in your trade or business.\u201d<\/span><\/li>\n
    2. \u201cA necessary<\/b> expense<\/b> is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.\u201d<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

      Let\u2019s say, if your primary vocation as a freelancer is filmmaking, then an ordinary<\/b> expense<\/b> might look like: <\/span><\/p>\n

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      1. \n
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        1. Backdrop<\/span><\/li>\n
        2. Light stands<\/span><\/li>\n
        3. Travel to shoot location <\/span><\/li>\n
        4. Parking pass<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

          Some necessary<\/b> expenses<\/b> may come up like this: <\/span><\/p>\n

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          1. \n
              \n
            1. Camera <\/span><\/li>\n
            2. Lens<\/span><\/li>\n
            3. SD card<\/span><\/li>\n
            4. Tripod<\/span><\/li>\n
            5. Shotgun Mic<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

              Finally, business deductions must<\/i> be separated from the following:<\/span><\/p>\n