Working as a freelance graphic designer is enjoyable and rewarding. You are able to choose the fascinating projects to work on, the clients to negotiate, and make a convenient schedule.
But it also can be quite expensive. As a graphic designer, you work with multiple programs and software packages, and other tech equipment. The key to getting the most out of your investment and lowering your tax bills is knowing what you can deduct from your expenses to avoid overpaying.
In case you work under a contract with a company on outsourcing, then for many things you can receive compensation from your employer. In this article, we have gathered the most important freelance graphic designer tax deductions and ways to put the money you spend on your business back in your pocket.
- Computer and Tech Equipment
- Digital Design Assets
- Software and Applications
- Website Expenses
- Workshops and Educational Events
- Coworking and Rental Spaces
- Undeductable Graphic Designer Taxes
Computer and Tech Equipment
As a graphic designer, you are probably aware of the importance of your computer hardware. And you also know that it’s impossible to save on the equipment, as speedy and hassle-free technology isn’t cheap.
However, as long as you need the computer or other electronic device for work, you can write it off. Most of your tech equipment is tax-deductible, whether you’re working from a laptop, desktop, or both. If you ever want to invest in new equipment, which is more powerful than yours, it will also be deducted from your taxes.
Digital Design Assets
Graphic designer tax deductions also apply to digital design assets, because websites like Creative Market are great for saving time but very expensive. If your business requires you to purchase and use physical media of art, your employer must reimburse you the costs. Simply submit the report and the accountant will deduct the cost of these materials from your taxes using an expense tracking app.
Software and Applications
As a graphic designer, you have a whole arsenal of applications for your work, from time tracking apps to tools, which allows generating animation sprites.
As long as you’re using software for your business, it’s deductible. Type of software freelancers typically use and can write off include:
- Design software: Adobe Suite, Webflow, and Figma.
- Project Management software: Dubsado, Asana, and Basecamp.
- Time tracking software: Toggl, Harvest, and TSheets.
- File sharing and storage: Dropbox, Google Apps, and WeTranser.
- Meeting software: Zoom, Calendly, and Acuity.
Another popular tool for any freelancer is the expense tracking and reimbursement app. When you have too many business expenses, you need a one-stop solution to not waste your precious time on submitting expenses. The Expense Sensei tracking app will assist you with this. Whether you are self-employed or work under a contract with an outsourced company, the app allows you to track and submit your expenses from any device, create reports in a pair of clicks and promptly upload receipts.
Your website, as well as your Instagram, Facebook or LinkedIn accounts, is literally your second face that you show off to the world. As a freelance designer, your website is under serious examination, so it’s vital to keep it looking freshly. Luckily, all of the costs of your website are tax-deductible.
Workshops and Educational Events
When you’re working as a freelancer, it’s essential to invest in your business, but you should also invest in self-development. Attending art and design conferences, going to industry meet-ups and taking courses are all excellent ways to upgrade your freelance career. And these expenses are all tax write-offs, as your employer is interested in the job to be done by qualified specialists.
The key to writing off classes and educational events is that they have to pertain to your niche. You may go crazy with taking dog grooming lessons, but you will have to take this design course (unless you pay for it yourself).
Coworking and Rental Spaces
If you work from home, you know that after a few days of isolation, you start to feel like Tom Hanks in “Cast Away”. That’s when you get to coworking. Coworking not only keeps your mind sober, but also saves your taxes.
Same with other places that you rent for work, for example, for seminars, meetings, or for films and photography. Whether you rent or own a home, you can write off some of your monthly rent or mortgage. This includes mortgage interest but not principal.
Undeductable graphic designer taxes
Of course, there are some expenses that you cannot include in your annual tax return. There are a few things that aren’t tax-deductible because your business doesn’t need them. Drinks for adults dedicated to business and travel catering or a fountain for the home office are unnecessary expenses.
Just think about what you are trying to subtract and what you are not. If something is necessary, common and business-related, it is likely to be deductible. If it’s a privilege or additional service that you don’t really need and doesn’t directly contribute to the success of the company you are working on, it’s most likely not.
Here are a few examples:
- Undocumented business expenses;
- Gas and mileage to your regular office;
- Non-business meals.
As you can see, the tax season doesn’t have to be stressful for freelance graphic designers. It’s easy to classify taxes into deductible and nondeductible. This knowledge allows you to save big money on your taxes each year. Saving on overwhelming taxes means that you can invest in yourself and in the development of your business. With the help of expense tracking apps, you can minimize the hassle and stress of filing your tax return.