Deductible Expenses and the Freelance Writer

So, last week found me at my accountant’s office, proudly handing over all my W-2s and other evidence of my income earned for 2009. Although it amounted to less than two week’s salary from when I was a lawyer, he smiled approvingly. For the past couple of years, I’d shown up with a laughably meager income that he sort of waved away. But this time, I could tell that he thought I’d at last gotten serious about my writing. He was right. But evidently, not serious enough.

“Good, good,” he said, flipping through my papers. “And what are your expenses?”

Ah. Those.

While I meticulously kept proof of my income, I hadn’t given much thought to my expenses at all. This year (2010), I had saved the receipt from the computer I bought when my old one went on the fritz, and saved the receipts from expenses incurred from building my clips site, but I couldn’t think of one receipt I had saved from 2009.

“Uh, I didn’t have any.” I said, stupidly.

“You didn’t buy paper?” he asked. “Pens? Books for your research? A library membership? ”

Yes, to all of those things, but I didn’t think to save the receipt for such small fry. But I should have. These little things add up and can make a sizable dent in the amount of taxes owed.

Are you keeping track of the expenses associated with your writing?

Here are some other expenses that may be deductible:

1. Business-related fees. Are you a paying member of MediaBistro.com? Do you pay for the online Writer’s Market (or the book, for that matter)? Do you pay for the internet, your professional website, a research service (e.g., LEXIS/NEXIS), a premium PayPal account? Business cards? All of these things and more may be tax deductible. Oh, and you know what? Magazine subscriptions might be deductible as well – of course, you have to prove that you used them for business expenses. My accountant says that an emailed print out of a query letter to that magazine, and/or an acceptance or rejection email from the editor of that magazine can help validate your claim.

2. Professional advice. Have you paid professional advice related to freelancing over the past year? An accountant, for example? What about an agent, editor, web designer or lawyer? Their fees might all be able to be written off – and so can the lunches or coffees that you had with them while discussing business.

3. Your home office. This is a complicated deduction and my accountant has never tried to deduct it from my taxes because my office is in a corner of my dining room (my former office now being my kids’ room). But if your office is used purely for business purposes, you may be able to deduct a portion of your annual rent or mortgage (based upon the percentage of space your office takes up) from your taxes.

4. Equipment used in your work. Your computer, printer, fax machine, scanner, cell phone, computer software and even office furniture may be able to be deducted, although it’s rather complicated. Because these things have a long lifespan, some things can be deducted outright, while other items must be amortized or depreciated over a few years. Ask your accountant his or her opinion. My accountant told me that my new computer, for example, would be depreciated over three years.

5. Payments not received. I was happy to hear about this one – a magazine I worked for shut down last year and even though my article was published in its final issue, I never got paid. It wasn’t worth chasing down the former publishers of the magazine, so I just mentally wrote it off. It was very pleasing to learn that this expense could also be formally written off!

6. Travel expenses. Of course, you can’t go on a luxury vacation, write a blog post about it and expense the trip. But if you have an assignment that requires you to travel, you may be able to deduct the business aspects of the trip. Attending writer’s conferences, workshops and retreats may deductible as well.

7. Subcontracted work. Did you ever pay another writer to complete a job you’d contracted for? The fee you paid this writer may be tax deductible.

I’m sure there are plenty of other deductions, but these were the ones my accountant brought up. Of course, not all of these will be applicable to your situation – but start saving those receipts anyway. Not only might it help you save on your taxes, it will help you to think of freelancing as your business, and not just a cool job.

And since none of this relates specifically to taxes for expatriates, here is some information about filing taxes that every expat should know: Foreign Tax Credit and Foreign Earned Income Exclusions. Good luck!