19+ Commonly Missed Tax Deductions for Self-Employed People

As a self-employed person, every business tax deduction can make a difference in your tax bill. Independent contractors can increase tax savings by deducting business expenses.

You’re likely familiar with some self-employed tax deductions, but this article will help prepare you for tax time. Keep reading to learn about freelancer tax deductions you might have missed.

How Do Tax Deductions Work for Freelancers?

Every freelancer and independent contractor is a small business owner for federal income tax purposes. The Internal Revenue Service (IRS) requires self-employed individuals to report business income and expenses for the tax year. 

Taxpayers must include freelance earnings in taxable income. However, freelancers can write off most business-related expenses. Tax deductions reduce your taxable income and lower your tax liability.

If you’re an experienced business owner, you might be familiar with several business tax deductions in the following list. However, the IRS offers write-offs for some unexpected items.

We recommend consulting tax professionals at 1-800Accountant to learn more ways to lower your tax bill.

Commonly Overlooked Tax Deductions for Freelancers

1. Self-Employment Tax Deduction

Sole proprietors must pay self-employment taxes on business income. The self-employment tax rate is 15.3%, representing 12.4% of Social Security and 2.9% of Medicare tax.

Employers and employees share the burden, and each party pays half the 15.3% employment tax. However, freelancers must cover the entire liability by paying self-employment tax.

Fortunately, sole proprietors can deduct half of their self-employment tax bill. The self-employment tax deduction reduces federal taxable income.

To take the deduction, determine your net business income and self-employment tax liability. Use IRS Schedule SE (Form 1040), Self-Employment Tax, to calculate the tax and the corresponding deduction. Report your self-employment tax deduction on your personal income tax return.

2. Self-Employed Health Insurance Deduction

Small business owners without employer-sponsored healthcare coverage can establish health insurance plans under their businesses.

Self-employed individuals can deduct health insurance premiums paid for eligible plans. The self-employed health insurance deduction includes medical, dental, and vision insurance payments. Individuals can also deduct the cost of qualified long-term care coverage.

Limitations may apply. For example, freelancers must generate a net profit to take the deduction. 

Use IRS Form 7206, Self-Employed Health Insurance Deduction, to determine your tax write-off. 

3. Retirement Plan Contributions

Self-employed individuals can deduct contributions to retirement accounts. Common types of retirement plans for small business owners include the following: 

• Simplified employee pension (SEP)

• 401(k) plan

• Savings Incentive Match Plan for Employees (SIMPLE IRA Plan)

The IRS imposes annual contribution limits depending on taxpayers’ self-employment compensation. To determine your contribution limit, follow the IRS instructions. 

Report your retirement plan contributions on IRS Schedule 1 (Form 1040), Additional Income and Adjustments to Income.

4. Qualified Business Income Deduction

Small business owners in eligible industries can take the qualified business income (QBI) deduction. Most self-employed taxpayers qualify, except those performing legal, financial, and certain other services.

Freelancers can deduct up to 20% of qualified self-employment income. Use IRS Form 8995 or Form 8995-A to determine your QBI deduction.

5. Home Office Deduction

Taxpayers with home-based businesses can generally deduct certain costs of maintaining a home office. To qualify, you must dedicate part of your house or apartment for business use only. Further, you cannot have a primary workplace outside your home.

Eligible business owners can determine their home office deduction using either the simplified or the regular method.

To use the simplified method, multiply your home office square footage by $5. The maximum simplified home office deduction is $1,500 (300 square feet).

To use the regular method, determine your total home-related expenses. Include costs such as rent, mortgage interest, maintenance, and utilities. Allocate a portion of the costs to your home office based on the percentage of the area dedicated to your workspace. For example, if your home office takes up 5% of your home’s total square footage, your deduction equals 5% of your total home expenses.

Calculate and report your home office deduction using IRS Form 8829, Expenses for Business Use of Your Home. We recommend partnering with CPAs to determine the best deduction method and learn what documentation you need. 

6. Tools and Supplies

Taxpayers can deduct the cost of business tools and office supplies. Keep track of your receipts for purchases of the following items: 

• Office supplies, such as writing utensils, paper, notepads, and staplers

• Printer ink, paper, and toner

• Minor equipment, including monitors and computer peripherals

• Office furniture and decorations

Your company can deduct numerous other business-related supplies and equipment. However, you should separately track items costing more than $2,500. Taxpayers must follow depreciation rules for large purchases.

7. Marketing and Advertising

Advertising and marketing represent deductible business expenses. For example, your business can write off search engine promotions or social media ad spending. Generally, the costs of growing your business and developing your brand qualify for tax deductions.

8. Subscriptions and Professional Dues

If you complete courses or continuing education to build new skills or maintain professional licenses, you can deduct the fees as business expenses.

Deductions for subscriptions and education expenses include costs of the following: 

• Memberships in professional organizations

• Subscriptions to industry-related publications

• Courses for technical skills or professional development

• Software and services used in your business

9. Legal and Professional Services

If you hire an accountant or outsource your small business bookkeeping, the service fees represent tax write-offs. Other professional services for freelancers include quarterly estimated tax preparation, entity formation, and legal advice.

10. Business Travel

Work-related travel expenses are generally deductible on business tax returns. For example, freelancers can deduct airfare and lodging for business conferences. You can also include Uber or Lyft charges for business-related transportation during your trip.

11. Vehicle Deductions

Your business car can generate business tax deductions using the standard mileage rate or the actual expense method. 

The 2025 standard mileage rate is 70 cents per mile. Business owners can claim a deduction per mile driven for business purposes.

Alternatively, taxpayers can deduct actual car expenses. Eligible deductions include vehicle insurance, repairs, maintenance, gas, and fuel.

Regardless of your chosen method, you can deduct tolls, parking fees, and depreciation. However, filers using the standard mileage deduction must follow restrictions on depreciation expense deductions.

Tax professionals can help with complicated rules and calculations for your vehicle deductions.

12. Rent

Self-employed taxpayers who lease an office space can deduct their monthly rental payments. Eligible deductions include commercial rent and memberships to coworking spaces. 

The rent expense deduction also applies to other business rentals, such as equipment, storage space, and short-term vehicle rentals.

13. Interest Expense

Freelancers can deduct interest payments, such as the following:

• Company credit card interest 

• Monthly interest on business loans

• Rental property mortgage interest

The deduction does not include interest on personal credit cards or mortgage interest on your residence.

14. Business Meals

Self-employed professionals can write off 50% of business-related meal expenses. The deduction applies to client meetings and meals during work trips. 

The IRS imposes a 50% limit on most business meals and doesn’t allow deductions for lavish or extravagant dining costs. Unfortunately, your daily lunches and coffee cannot generate tax deductions.

We recommend saving receipts and meeting notes from client lunches and work-related travel. Your documentation should support your business meals deduction in the event of an IRS audit.

15. Business Gifts

The IRS allows taxpayers to deduct business gifts – with limitations. 

Small business owners can deduct the cost of gifts to clients or employees. However, the deduction cannot exceed $25 per person. For example, if you send $50 gifts to three clients, you can write off $25 per recipient ($75 total).

The business gift deduction does not include personal purchases or non-business gifts to family members.

16. Real Estate Deductions

Landlords, Airbnb hosts, and real estate investors can deduct various property ownership costs. If you earn rental income, consider the following tax deductions on your rental properties.

• Property taxes

• Repairs and maintenance

• Depreciation expense

• HOA fees

• Mortgage interest

17. Business Tax Deductions for Employers

As a small business owner, you might not hire a large team, but you can deduct payments to part-time employees or subcontractors. Business owners with employees can deduct wages, benefits, and payroll taxes paid. 

Maintain records of payments to other independent contractors or freelancers you hire. 

18. Standard or Itemized Deductions

Sole proprietors can claim personal tax deductions, which apply to all individual taxpayers.

The 2024 standard deduction is $14,600 for single taxpayers and $29,200 for married couples filing jointly.

Taxpayers can alternatively take itemized deductions using IRS Schedule A (Form 1040), Itemized Deductions. Consider the following common itemized deductions: 

• State and local taxes

• Home mortgage interest

• Medical expenses, limited to 7.5% of adjusted gross income (AGI)

• Charitable donations to qualified organizations (limitations apply)

19. Other Frequently Missed Tax Deductions for Independent Contractors

Self-employed individuals can take tax deductions for numerous other business expenses. Consider the following common tax breaks for freelancers.

• Payment processing fees from vendors such as Stripe or PayPal

• Shipping and postage

• Website hosting and design

• Business insurance

• Internet, telephone, and VPN charges

• Firewalls and data security

• Business checking and savings account service fees

• Utilities

Depending on your operations, your small business could generate additional write-offs. Tax professionals can help you identify more self-employment business deductions to lower your tax bill.

How Do Freelancers Claim Tax Deductions?

Sole proprietors report self-employment income and expenses on IRS Schedule C, Profit or Loss from Business (Sole Proprietorship). Schedule C calculates business income or loss.

Landlords and rental property owners should report real estate income using IRS Schedule E (Form 1040), Supplemental Income and Loss.

Taxpayers should attach Schedule C and/or Schedule E to IRS Form 1040.

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You may need to file different tax forms if you have a multi-member LLC or corporate business structure. Check with your tax advisor for help with your compliance.

1-800Accountant Can Help You Maximize Your Freelance Tax Deductions

While you focus on your freelance business, let 1-800Accountant handle your tax filings. Professional CPAs can take over your tedious paperwork and give you peace of mind during tax season. 

1-800Accountant has a team of tax experts who offer dedicated, industry-specific advice. Tax professionals can help you maximize your business deductions, find available tax credits, and lower your tax bill.

Schedule a free consultation with 1-800Accountant for self-employment tax savings.