The IRS Test: Ordinary and Necessary
As a freelancer, you report income and expenses on Schedule C, which flows into your Form 1040. The IRS lets you deduct any expense that is both ordinary (common in your field) and necessary (helpful for your work), even if it is not required. You do not need a receipt for every $5 purchase, but you do need a system that shows what you spent and why it relates to your business.
Common Write-Offs for Freelance Creatives
Most designers, developers, writers, and marketers can deduct:
- Software and subscriptions: Adobe Creative Cloud, Figma, GitHub Copilot, Canva, project management tools
- Equipment: laptops, monitors, cameras, drawing tablets, external hard drives (often deducted over time or in full the year you buy them, depending on cost)
- Contractor and subcontractor payments if you hire other freelancers to help on a project
- Professional development: online courses, industry conferences, certification exams
- Marketing costs: website hosting, domain names, portfolio platforms, paid ads
- Business insurance, including errors and omissions coverage
- Bank fees and payment processor fees (Stripe, PayPal, Square)
- A portion of your phone and internet bill based on business use percentage
Home Office and Mixed-Use Costs
If you work from home, you can deduct a share of rent or mortgage interest, utilities, and renters or homeowners insurance using the home office deduction. You either use the simplified method (a flat rate per square foot, capped at 300 square feet) or the regular method (actual expenses times the percentage of your home used exclusively for work). The word exclusively matters: a desk in your bedroom that you also sleep in does not qualify.
For mixed-use items like your phone or car, only the business-use percentage is deductible. If you use your phone 40 percent for client calls and invoicing, you deduct 40 percent of the bill. Mileage driven to meet clients or pick up supplies is deductible using the current IRS standard mileage rate, so track trips as they happen.
Self-Employment Tax and Health Insurance
Because you are taxed like a business, you also owe self-employment tax of 15.3 percent on net earnings, covering Social Security and Medicare. This is separate from income tax and calculated on Schedule SE. The good news: half of that self-employment tax is deductible on your Form 1040. If you pay for your own health insurance, those premiums are usually deductible too, up to your net self-employment income.
Keep Records That Survive an IRS Look
Mix business and personal spending in one account and you will spend hours every April trying to remember what a $47 charge was for. Open a separate business checking account or card, save digital receipts as they come in, and log mileage and home office square footage as the year goes, not in March. If you pay estimated taxes quarterly using Form 1040-ES, tracking deductions in real time also helps you estimate accurately and avoid overpaying or underpaying.