Save thousands on your freelance taxes

A couple of days ago, a Pop Club member came to our Office Hours super stressed about her taxes. They ended up coming out to way more than she thought they would be (like thousands of dollars more).

Plus, she was avoiding dealing with them because she’d just moved, and she couldn’t file them the way she used to. It really activated her anxiety. Boy, howdy – I could really relate. Can you?

And she’d actually just made one super simple mistake. Let me explain: she’d accidentally chosen the simplified method for her Home Office write-offs on her taxes. But the regular method is almost always the best route to take for that particular category.

Taxes can be confusing, here’s how this one write-off works (and can save you thousands).

Home Office Write-Offs

If you qualify, you can write-off a percentage of your living expenses (rent, utilities, etc.).

To qualify, you must meet the following criteria:

• You use part of your home for business
• The business area at home is separated, and it’s obvious that personal activities are excluded from it (mine was in a corner of my living room at one point; now it’s a separate room – both qualified).
• Your home office must also be one of the following:
• The principal location of your business (this is the qualification for most of us)
• A place where you regularly meet with customers or client
• A separate structure not attached to your home.

No matter which method you choose, you’ll need to know how many square feet your home office is and how many square feet your entire home is.

Simplified Method

The simplified method gives you a certain dollar amount per square foot. The rate changes every year. This year, you’ll get $5 per square foot.

Regular Method

The regular method uses actual expenses like utilities, rent, etc. to calculate your deduction. This method requires you to find what percentage of your home’s square footage is made up by your home office and then splits those expenses by that percentage.

How to find your home office write-offs

I always use the regular method for my taxes.

Quickbooks

Personally, I just use Quickbooks for this. Here’s how:

1. Go to the “Taxes” tab
2. Find “Home office”
3. Choose Regular Method from the pop-out
4. Input your office and entire home square footage
5. When you categorize your expenses in “Transactions” categorize your home expenses as business expenses and then choose the appropriate category with “(home office)” in the name.
6. When you file your taxes (I use Turbotax), double-check that it all gets imported and you’ve chosen the “Regular Method”

Manual

If you’re more of a spreadsheet girlie, here’s a quick tutorial.

1. Calculate your percentage: Divide the square footage of your entire home by the square footage of your home office
2. For all of your home office expenses, take the percentage that is your home office. Here are the expenses you can write off:
1. Homeowner/rental insurance
2. Mortgage Interest
3. Other home office expenses
4. Property tax
5. Rent and lease
6. Repairs and maintenance
7. Utilities (internet, phone, electricity, oil, gas, water/sewer, trash, etc.)
3. Add this to the Home Office category in your tax software

You’re not alone…

It doesn’t matter how many years I do this, the fact that I earn more money every single year means that I will owe more than last year still intimidates me and makes me want to avoid them at all costs.

*live footage of me doing my taxes…* 👀

You might ask, “Why don’t you just hire someone else to do ‘em?” I’ve tried that, and it honestly didn’t make it that much easier and it made it more expensive. I was taught how to do my taxes by a professional with over 30 years of experience. I know can do ‘em myself.

It’s just that, despite the work I’ve done on my money mindset, it’s a money thing I still struggle with. I’m human!!