Freelance graphic design business (on weekends) tax deductions?
I just graduated college and I'm looking into establishing a freelance graphic design business on the side (weekends) of my career position. What am I...
I just graduated college and I’m looking into establishing a freelance graphic design business on the side (weekends) of my career position. What am I able to deduct on taxes? (Computer hardware, software, portion of the rent, internet expenses, etc.) I’m mostly curious about deducting a portion of my rent, so it would be helpful to know if that’s possible. Thanks in advance!
A home office deduction exists, and might be available for you. If you use a portion of your home regularly and exclusively for your business, then you can deduct the expenses of that portion of your home, figured using square footage of your home office vs. square footage of your entire apartment. If you have a desk in the corner of a bedroom that also serves occasionally as a guest room, or you sometimes use the same computer to surf the net or check non-business email, then you can’t deduct it as a home office since the use wouldn’t be exclusive. And if you’re just using it for business on weekends, you might not meet the definition of "regularly" – if your side business went well and you were also using it most nights, it might qualify.
The IRS often looks closely at home office deductions, and might even visit your home to see if it qualifies, so cheating on this is not a good idea. Not that you would – I’m just mentioning that.