Business Expense Deduction: Who Qualifies and What You Get
Freelancers can reduce their taxable income by deducting professional costs like rent, travel, and equipment from their total earnings.
If you work for yourself, this scheme allows you to subtract the costs of running your business from your total income so you pay less in taxes.
Who it's for
This is for freelancers who are reporting income to the tax authorities.
What you get
You can lower your taxable income by deducting legitimate business costs. This includes expenses such as your studio rent, travel costs for work, and the cost of equipment used for your professional activities.
What it costs you
While there is no direct fee to use this deduction, it requires significant record-keeping. You must keep all of your business receipts for seven years to prove your expenses.
The catch to know
You cannot deduct the full cost of items that serve both personal and professional purposes. If you use your home or your phone for both life and work, you must prorate the expense, meaning you only deduct the specific portion used for business.
How to apply
- Collect and organize all receipts related to your business activities.
- Calculate the specific portion of shared costs used strictly for work.
- Report these deductions when filing your taxes with the tax agency.