Taxes aren’t anyone’s favorite task—and we could probably include accountants in that group! But as a copywriting professional who likely takes on some amount of freelance work, you need to take your taxes seriously. Today, we’re going to talk about what kinds of deductions your copywriting career can net you.
Before we dig in any further, let us be clear: we are not tax preparation or accounting professionals. Before you use any of the following deductions, please contact a licensed tax preparation professional. While this information is aimed at US residents, international copywriters can use this to help focus further research and/or ask questions of their own tax preparation expert.
Okay, now that that’s out of the way, there are deductions you’ll want to look into as a copywriter. Once you’ve figured out how much you’ve earned for the year, it’s time to think about how to offset some of the taxes you’ll pay on that. Deductions can reduce how much income you have to pay taxes on. For example, if you made $80,000 from copywriting, but had $10,000 in business expenses, you’d be paying taxes on $70,000 versus $80,000.
And as business owners, that’s crucial to being able to reinvest in our businesses!
Here are a few tax deductions for copywriters you should look into:
Home Office Deductions
In 2017, the Tax Cuts and Jobs Act eliminated the home office deduction for employees. Meaning, if you were employed full-time by a company, you could no longer deduct your home office. However, self-employed individuals that use their home office as a primary place of business, the deduction still stands.
You can claim this deduction whether you own your home or rent. The key is you must have a space that is only used for business. Your child’s playroom that doubles as your office doesn’t count.
There are two ways to calculate the home office deduction. Most tax preparation software will walk you through it, but a tax professional can also guide you on the best option for you.
Simplified option: This is what it sounds like: simple. The square footage of your office space is multiplied by a prescribed rate.
Regular method: This requires a bit more math based on actual expenses (rent/mortgage, insurance, utilities, repairs, etc.). Generally, this is based on a percentage (the percentage of your home used for business compared to the rest of it).
Deductions for Office Supplies & Office Expenses
These two categories are very similar, but treated ever-so-slightly differently. The good news is, there are plenty of items that fall under both.
Office supplies are typically things you use up. Think: paper, pens, paper clips, staples, stamps, notebooks, and tape.
Office expenses are things like:
- Software: Any programs you use to run or build your business (Dropbox, QuickBooks, SamCart for checkout pages, etc.) are deductible.
- Your portfolio site: The hosting costs, domain name costs, and any other costs associated with the maintenance of your online portfolio site (including the cost of hiring someone to build it, should you choose to do so) are deductible.
- Computers and big-ticket equipment: Some higher-cost items are considered “business equipment.” For expensive items like these, you can choose to deduct them all at once or deduct the depreciation over a series of years. If it’s under $2,500, you can opt to deduct it all at once, which can help lower your taxable income in a really lucrative year!
- Home office furniture: When you buy a desk or chair or filing cabinet for your home office, you can deduct those, too. Like big-ticket technology, you may be able to opt for a deduction or depreciation if the furniture you purchased is pricey.
- Internet and cell phone: If you’re using Wi-Fi and/or your cellphone to conduct business (client calls, work, etc.), you may be able to deduct a percentage of your bills. (As with everything, talk with your account if you’re unsure the best way to go about this.)
IRA or 401k Deductions
As a freelancer, you do have the ability to save for your own retirement. Your employer may not be offering a 401k match, but if you are a sole proprietor or an LLC with just one employee (which is taxed the same as a sole proprietor), then you can match your own 401k contributions. As a self employed business owner, you are the employee AND the employer.
That means as the employee, you can contribute up to $22,500 for 2023 tax year (filed in 2024). The amount is always a higher amount for those over age 50. When in doubt just Google “401k contribution limit.” As the employer, you can contribute up to a percentage of your compensation. A tax pro or most tax software can help you work through the math.
For traditional IRAs, you may also be able to deduct your contribution. This depends whether or not you or your spouse (if you are married and filing jointly) have a retirement plan at work and your income exceeds certain levels. If you/your spouse do not have a retirement plan from an employer, then the full amount is deductible.
Deduct Your Advertising Costs
Did you dip your toe in Facebook or Google ads for your business this year? Or did you even take out an ad in the local town circular? The cost of advertising your business is deductible.
Professional Development Deductions
Did you take any courses to improve your business or copywriting skills? (Ahem, ahem.) You can deduct the cost of certain professional development training. (US residents: read more about educational tax deductions.)
Other professional development-related expenses include:
- Books: Purchased books that you read specifically to help you grow your business? They’re deductible. This includes books about copywriting (like Nicki’s own Copywriting Strategies), but other books that aren’t specifically about copywriting that are intended to help you grow as a business owner (and grow your business). Check out all our book recommendations right here >>
- Subscriptions: If you subscribe to Ad Age, Writer’s Digest, Entrepreneur or other such periodicals to keep your writing and business skills sharp, you can deduct these subscriptions.
Deduct Legal and Professional Services
If you hired a lawyer to help you incorporate (generally not necessary for a copywriter, but still), an accountant to do your taxes, or another similar professional to help you with your business, you can deduct those costs.
Business Travel Deductions
If you’ve had to hop in your car to drive to meetings with clients, you can deduct the cost of that travel. Sure, you can figure out what you paid for gas for just those trips, but most people tend to just use standard mileage: You track the miles you drive for business and then multiply them by a certain amount to see how much you can deduct. Standard mileage for 2023 taxes (the taxes that you file in 2024) is 65.5 cents for every business mile driven. That may not seem like a lot, but if you’re driving a lot to get to client meetings (or driving daily to get to your contract gig), it can really add up!
You do need to keep track of all your expenses and hold on to receipts (physical or digital) in case of an audit. If you haven’t already started or developed a system for tracking your expenses, do so now!
Your turn! Have you been tracking your deductions this year? Is there anything you’re surprised you can deduct? Let us know in the comments below!
Last Updated on January 3, 2023