Tax season can be stressful, especially for small business owners or freelancers who might owe taxes at the end of the year. It can be overwhelming to look at the tax debt you owe from the profits you have made.

Our law firm focuses on tax resolution and helping people who owe the IRS or State of Indiana $10,000 or more. We’ve seen small business owners and freelancers get blindsided every year by a huge tax bill. That nasty surprise often leads to them falling behind on their taxes for years on end. If that’s you, we can help. Contact our firm today to discuss your option to deal with what you owe the IRS or the State of Indiana.

So, if you’re worried about how you’re going to pay your tax bill this year, here are some things to review. There are many legitimate deductions you can utilize as a small business owner or freelancer to bring your tax liability down. We encourage you to talk to a tax professional to see if any of the following deductions apply to you.

1. Home Office

If you have a home office, you will be able to deduct a part of your rent or home expenses as an expense for your business. Be careful. Home office deductions require a dedicated office space with exclusive use for business. That means no other use, including personal use. So speak to a tax professional to find out if you qualify. In addition to your home office, you can deduct any related office supplies you used over the year. Keep the receipts for paper, ink, and any other home office supplies you’ve purchased. You should also be able to deduct any technology you bought specifically for work. If you have a work computer, internet, and office furniture, those can maybe qualify you for a tax deduction. Furthermore, you can deduct any expensive software programs you need to purchase for work like adobe photoshop or your word processor.

2. Insurance Premiums

If you work from home, you may be able to deduct your health insurance costs or any other insurance that is required for your job. If you have to purchase liability or malpractice insurance, that is a work-related deduction.

3. Travel Costs

If your work requires you to travel, the cost of that travel is a deduction. Hotel costs, mileage, and even food you eat during work trips are deductible expenses. However, if you are partially traveling for work and luxury at the same time, you have to be careful. Any portion of your trip used for a personal vacation is not a deduction. You can only deduct expenses that are specific to your work costs.

NO ESTIMATING!! Remember that you have to keep a mileage log if you are claiming car or truck expenses which must be recorded near the time of use. You also must keep receipts of your expenses. Credit card statements are not enough to prove the actual expense – the specifics of what the expense was for must be verified with a receipt.

4. Advertisement Expenses

If you’ve spent any money advertising your business, you can use that expense as a write-off. Any advertisement will qualify as a deduction whether you created online ads or utilized influencer marketing for sponsored posts. If you spent money promoting your business, record that expense for your tax records and keep your bills and any receipts.

5. Car Expenses

If your automobile is an integral part of your work, you can deduct expenses associated with it. You can itemize costs like auto insurance, gas, and any maintenance work you paid. However, you can only deduct the expenses you utilized while working. If you used your business car as a personal car, you could not deduct all these expenses. You will have to apportion them. It may be simpler to claim the business mileage rate. You have to keep a mileage log that records the beginning odometer reading, end of the trip odometer reading, where you went, and why you made the trip. Also, record your odometer reading on January 1st of each year and December 31st, too. Your mileage log is just about the first thing an auditor asks to see in an audit if your claim this expense, so keep good records.

6. Occupational Licenses

If your business or freelancing job requires you to have a license in your field, then that license is a business expense in any tax year you have to pay for your occupational license.

Owe Back Taxes and Need Tax Relief?

While many of these tax breaks may seem incredibly appealing, incorrectly claiming them can result in an audit or the IRS disallowing your deductions and charging you penalties and interest on your tax debt, making your problems worse.

If you want a tax lawyer who knows how to navigate the IRS maze, reach out to our firm, and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.