14 Freelance Graphic Designer Tax Deductions

As a freelance designer, you’ve got enough to worry about between meeting deadlines for projects, understanding the needs of your clients, and building a network for future business opportunities. The last thing you need is a huge unexpected tax bill because you didn’t take all the tax deductions available to you.At Hurdlr, we’ve found that most freelancers are eligible to take a lot more deductions than they actually claim, meaning your cash flow could be much higher! You spend your time hustling, so let us do the dirty work by finding the most valuable tax deductions that most freelance designers aren’t taking. Below are the top 14 freelance graphic designer tax deductions and write offs.

Deduction #1
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Legal & Professional Services

Business owners can deduct legal and professional fees to the extent they are an ordinary and necessary part of operations.

Business owners can deduct legal and professional fees to the extent they are an ordinary and necessary part of operations. Legal and professional services is a broad category that generally includes expenses for your lawyer, accountant and any other professional consultants you may hire.

Example: Rachel signed up for a LegalZoom account in order to help draft client contracts. She prepaid the subscription for the entire year which cost her $288. Rachel is able to deduct the entire amount from her gross income as a legal expense on her Schedule C.

Where to Take It: Line 17 on Schedule C.

freelance graphic designer tax deductions schedule c line 17

Schedule C (Form 1040) line 17


Deduction #2
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Advertising Expense

The IRS allows you to deduct reasonable advertising expenses that are directly related to your business activities.

The IRS allows you to deduct reasonable advertising expenses that are directly related to your business activities. The deduction for advertising expenses is broad and can include a number of expenses used to promote your business as long as you can reasonably support it on your tax return.

Example: Danny wants to promote his freelance web design site and services, so he plans to run targeted Facebook ads for several weeks to drive traffic and sales. The campaign costs a total of $250 a week. If Danny runs the campaign for a month and it was his only advertising expense for the year, he can deduct $1,000 on Line 8 of his Schedule C.

Where to Take It: Line 8 on Schedule C.

freelance graphic designer tax deductions schedule c line 8

Schedule C (Form 1040) line 8

Deduction #3
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Home Office Deduction

If you use an exclusive area of your home to conduct business, you may be able to deduct related expenses on your tax return as a home office deduction.

If you use an exclusive area of your home to conduct business, you may be able to deduct related expenses on your tax return as a home office deduction. The space has to be fully dedicated to business though, which means your couch, exercise room, and kitchen table don’t count. Further, it needs to be used regularly for management and administrative functions. If you are allowed to take the home office deduction you can take it in two ways, simplified and regular:

  • If you use the simplified method, you can take a deduction of $5 per square foot for each square foot of your home used for business purposes (up to 300 square feet).
  • If you use the regular method, keep track of all your home expenses, including maintenance, repairs, utilities, real estate taxes, rent, etc. so you can deduct the portion of these expenses related to your home office. Use Form 8829 to calculate your home office deduction.
  • Direct expenses that only benefit the part of your home you use for your business are usually 100% deductible.
  • If you elect to use the simplified method, you cannot claim any home depreciation for the portion of your home you use for business activities.

Example: Bradley, a freelance web designer, converts the spare room in his apartment into an office, which he uses exclusively to call clients and work on project designs. When it comes time to do his taxes, Bradley decides to try itemizing his home office expenses since he thinks it’ll be a bigger deduction than the simplified method. Brad measures the room at 180 square feet out of 700 total square feet in his apartment. His rent is $2,000 per month, and utilities average $80 a month. Timothy’s home office expense can be calculated as follows: (Rent + Utilities) x 12 = $24,960 x percentage of home expenses used for office. Tim’s home office percentage is 25.7% (180 sq. feet / 700 sq. feet), therefore the applicable home expenses Brad can deduct on his business’ tax return are $6,415, or $5,515 more than what he could have claimed if he took the simplified deduction (which would have been 180 sq. feet x $5).

Where to Take It: Unless using the simplified method, complete Form 8829, then list total on Line 30 of Schedule C.

freelance graphic designer tax deductions schedule c line 30

Schedule C (Form 1040) line 30


Deduction #4
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Business Travel

Independent designers need to travel away from home to meet with clients and potential employees and business partners, attend conferences, or conduct other activities related to business development.

Independent designers need to travel away from home to meet with clients and potential employees and business partners, attend conferences, or conduct other activities related to business development. If you travel for for business purposes, whether it be within your city or town, a different state, or even outside of the country, your travel expenses will generally be deductible as long as the primary purpose of your trip was for business.

Example: Pedro, a freelance designer, bought a flight from Chicago to Toronto to attend the latest web design conference. The round trip flight cost $770 and his four night hotel stay cost another $620. Jimmy can take the total $1390 as a tax deduction on his Schedule C.

Where to Take It: Line 24a on Schedule C.

freelance graphic designer tax deductions schedule c line 24a

Schedule C (Form 1040) line 27a

Deduction #5
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Office Rent

Office space can be one of the most expensive costs an entrepreneur incurs. Whether you have an office in a commercial building, work from home, an incubator or a coworking space the costs you incur to house your business operations may be deductible and they can quickly add up.

Office space can be one of the most expensive costs an entrepreneur incurs. Whether you have an office in a commercial building, work from home, an incubator or a coworking space the costs you incur to house your business operations may be deductible and they can quickly add up.

Example: Martin rents a private office at WeWork for $550 a month in order to meet with his design clients in a more professional setting. He’s had the membership for the full tax year. Martin would be able to deduct $6,600 on his annual tax return for office rent in addition to home office expenses if he continues to conduct business at home.

Where to Take It: Line 20b on Schedule C.

freelance graphic designer tax deductions schedule c line 20b

Schedule C (Form 1040) line 20b


Deduction #6
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Software & Online Service Subscriptions

Many freelance designers subscribe to online services or purchase software to support project management, invoicing, and productivity, just to to name a few.

Many freelance designers subscribe to online services or purchase software to support project management, invoicing, and productivity, just to to name a few. Photoshop, LeadPages, Hurdlr, FreshBooks, and Dropbox could be considered software or online service subscriptions. Since these platforms are often critical to what marketers do, they are generally fully deductible.

Example: Robbie is a freelance web designer who needs an Adobe Creative Cloud subscription to create and edit graphics for his clients. The subscription is $70 a month, which he signed up for on March 15 of the current year. Robbie could take a deduction of $665 on his year-end tax return ($70 x 9.5).

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.

freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a

Deduction #7
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Employee Wages & Payments to Contractors

Many successful sole proprietors reach a point when they can no longer do everything on their own. To continue growing, solopreneurs often outsource the workload to other contractors or hire employees.

Many successful sole proprietors reach a point when they can no longer do everything on their own. To continue growing, solopreneurs often outsource the workload to other contractors or hire employees. Employees are different than contractors in a financial sense in that the employer is responsible for paying part of their “payroll” or FICA tax, which is 7.65% of their gross income, while contractors just receive a paycheck without an additional tax liability. However in the case of both employee wages and contractors, any amount paid for services rendered is a deductible expense on Schedule C.

Example: Jane, a freelance web designer, recorded sales of $50,000 between billing clients for designs and affiliate marketing deals during the year. Janet is an unincorporated sole proprietor. She withdrew $36,000 over the course of the year from her business checking account to pay personal bills and support her family.

Jane also contracted out SEO work to Felipe, who she paid $1,500 to improve the page rankings of her website. Jane can deduct $1,500 on line 11 of her Schedule C as contract labor, but cannot deduct the $36,000 as wages paid to herself on line 26 for employee wages. Since she paid an independent contractor more than $600 during the year, Janet also has to complete and file a 1099-MISC to report the amount paid to Felipe.

Where to Take It: List employee wages on line 26 of Schedule C , list contractor payments on line 11. If amount paid to an individual contractor is greater than $600, also complete and file Form 1099-MISC.
freelance graphic designer tax deductions schedule c lines 11 and 26

Schedule C (Form 1040) line 26


Deduction #8
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Website Expenses

Website costs to acquire, design, maintain and market your site are common business expenses. Web costs are broad and can include but are not limited to development, programming, domain fees, hosting, and analytics. While many of these costs are deductible, the IRS treats certain website expenses differently.

Website costs to acquire, design, maintain and market your site are common business expenses. Web costs are broad and can include but are not limited to development, programming, domain fees, hosting, and analytics. While many of these costs are deductible, the IRS treats certain website expenses differently. Generally, the money you spend on development may need to be capitalized and deducted over several years, while the money you spend on operating and maintenance can be expensed in the year incurred.

Example: James’ first step in starting his web design business is creating a visually stunning website. He purchases a domain and hosting plan through Bluehost, paying in advance for the entire year for $165. He also contracts with a copywriter through Fiverr for $100 to get professional sales copy pitching his services. John can expense the $265 on his Schedule C for website expenses in the first year.

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.
freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a

Deduction #9
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Section 179

The Section 179 deduction allows you to fully deduct certain qualifying property in the year purchased, rather than depreciate it over many years as would ordinarily be required (for capital assets).

The Section 179 deduction allows you to fully deduct certain qualifying property in the year purchased, rather than depreciate it over many years as would ordinarily be required (for capital assets). Generally, if you purchased tangible property for business use and placed it into service, subject to certain exceptions, you may be allowed to deduct up to $500,000 (2016 limit) in the year you incurred the expense. Section 179 can be applied to vehicles, office furniture and equipment, certain software costs and capital improvements made to your business property, amongst other things. Entrepreneurs who invest in business property can realize significant tax savings from taking advantage of the Section 179 deduction.

Example: Kelly decides she’s going to supplement the income from her day job by doing freelance web design projects in her spare time. In order to motivate herself to grow her freelancing business, Kelly sets up a dedicated home office (for which she plans to take the home office deduction). She purchases an iMac for $1,500, a desk for $300, and an office chair for $150. Kelly is able to expense the entire $1,950 it cost to set up her office rather than capitalize the equipment and deduct over multiple years. Kelly would also be able to deduct other business equipment she puts into service during the year as long as the total is below the $500,000 ceiling.

Where to Take It: Line 13 on Schedule C.
freelance graphic designer tax deductions schedule c line 13

Schedule C (Form 1040) line 13


Deduction #10
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Startup & Organizational Costs

Starting a new business can be an expensive proposition, which is why the IRS allows new businesses to deduct up to $5,000 in start-up costs and $5,000 in organizational costs incurred in the first year before operations commence.

Starting a new business can be an expensive proposition, which is why the IRS allows new businesses to deduct up to $5,000 in start-up costs and $5,000 in organizational costs incurred in the first year before operations commence. The IRS defines startup costs as those “incurred before you begin operations and include certain amounts paid to create a new active business or explore the acquisition of an existing active business”. Organizational costs may be incurred by partnerships or corporations (including single member LLCs and single member S and C corps) and include legal, accounting and filing fees associated with starting your business. The $5,000 first year deduction is reduced dollar-for-dollar for start-up costs exceeding $50,000, so companies that incur start-up expenses exceeding $55,000 are not permitted to take the first year deduction. Expenses in excess of the $5,000 limit are amortized over 180 months, or 15 years. Knowing how to treat your business’s startup and organizational costs can help you maximize your tax deductions and facilitate compliance with IRS regulations.

Example: Pablo left his job at a boutique web design company to become an independent designer on June 1 of the current year. He hires a lawyer to register the new company, Summit Designs LLC, as well as draft binding contracts for new clients. The lawyer’s fees for these services is $2,000. He also hires a web developer to build and market aspects of Summit’s website, which cost $2,500. Pablo is able to deduct the entire $4,500 startup expense in the first year as it’s under the $5,000 cap. If Pablo had startup expenses in excess of $5,000 (but below $55,000), he could deduct the excess equally over 180 months.

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.
freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a

Deduction #11
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Professional Memberships

Belonging to professional societies, clubs, and groups as an entrepreneur is a valuable method of expanding knowledge and building relationships. Incurring membership fees to trade groups, professional organizations, business leagues, public service organizations, and other types of groups is generally a deductible expense.

Belonging to professional societies, clubs, and groups as an entrepreneur is a valuable method of expanding knowledge and building relationships. Incurring membership fees to trade groups, professional organizations, business leagues, public service organizations, and other types of groups is generally a deductible expense.

Example: Patrick pays $150 a year for an AIGA membership. He’s able to deduct the entire amount as a business expense on his Schedule C.

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.

freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a


Deduction #12
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Phone & Internet

If you use a phone and internet service to do work for your business, there’s a good chance you can deduct some of the bill from your taxable income even if you don’t have a dedicated phone or network for business.

If you use a phone and internet service to do work for your business, there’s a good chance you can deduct some of the bill from your taxable income even if you don’t have a dedicated phone or network for business. The IRS allows a partial deduction for your phone and internet bill if some of the time spent was for a business purpose. The taxpayer is responsible for calculating the “business use” percentage of phone and internet service and retaining documentation supporting the calculation.

Example: Cyrus does freelance web design projects in his spare time. To discuss plans, revisions, and negotiate terms with his freelance clients he uses his personal cell phone. He also uses the wifi network in his house to work on projects over the weekends. Cyrus estimates he spends an average 10 hours a week on the phone or doing designs for his freelance business. His phone plan is $75/month and the wifi bill is $50 per month. Cyrus claims a $90 deduction on his Schedule C for other business expenses related to his phone and internet. He calculated this by finding his business use percentage and multiplying it by the total annual cost of his internet and phone bill ([10 hours / 168 hours in a week] * [$125 * 12 months]).

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.

freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a

Deduction #13
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Business Gifts

Many entrepreneurs give gifts to their customers, clients, suppliers or other business associates to show their appreciation. Gift-giving is a regularly accepted part of doing business, and the IRS recognizes the expense as a legitimate tax deduction.

Many entrepreneurs give gifts to their customers, clients, suppliers or other business associates to show their appreciation. Gift-giving is a regularly accepted part of doing business, and the IRS recognizes the expense as a legitimate tax deduction. Businesses are allowed to take a deduction subject to a $25 limit per gift per recipient. The business gift deduction could be claimed on your Schedule C or your Schedule E, while gifts made to charitable organizations could be deducted on your Schedule A if you itemize your deductions.

Example: Millie, a freelance designer, wanted to do something special as a thank-you to her first big client. She knows her client loves basketball, so she purchased two tickets to the upcoming game. The tickets cost $100 total, so Mary would be able to deduct $50 ($25 x 2) for the gift.

Where to Take It: Calculate in Part V of Schedule C, list total of “other expenses” on line 27a.

freelance graphic designer tax deductions schedule c line 27a

Schedule C (Form 1040) line 27a


Deduction #14
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Physical Supplies

Oftentimes designers and other visual creatives need physical tools to aid in the creation process. These expenses can be fully claimed on a designer’s Schedule C as a necessary business expense.

Oftentimes designers and other visual creatives need physical tools to aid in the creation process. These expenses can be fully claimed on a designer’s Schedule C as a necessary business expense.

Example: Corinne spent $150 on high-quality drawing pens, paper, and rulers in order to quickly sketch out design ideas and flowcharts for her clients. Corinne can claim the full amount as a business expense in the “Supplies” line on her Schedule C.

Where to Take It: Line 22 of Schedule C.

freelance graphic designer tax deductions schedule c line 22

Schedule C (Form 1040) line 22

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial advisor or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.

Make more money with Hurdlr by minimizing your taxes and increasing your pay. Hurdlr seamlessly tracks your true expenses, mileage, and deductions in real-time, on the go.

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