If tax season wasn’t kind to you this year, aim for a better outcome going forward—starting today.

How?

By maximizing your deductions.

Tax deductions reduce the amount of money you owe tax on.

So, in very basic terms, if you earn $50,000 and have $10,000 worth of deductions, the IRS only taxes you on $40,000.

Where do you get deductions?

Freelance business expenses are a major source of tax deductions. Almost every penny you spend related to your business is deductible, sometimes fully but sometimes only partially.

The idea is if you spend money on your business, the government isn’t going to count it as income.

How do you maximize deductions?

By making sure you get credit for all of them on your tax return. And to to do that, you have to track all of your expenses.

I’ll be the first to admit that, as a freelancer, when you’re already juggling 1001 tasks, yes, tracking expenses is a royal pain.

But it’s a pain that pays off.

Your deductions can really add up and can make a big difference in reducing what you owe or increasing the amount you get from your income tax return.

3 Freelance Deductions You’re Likely to Under-Report

If you’re not religious about your expense tracking, there are several categories where you’re likely to cheat yourself out of possible deductions, including:

1) Vehicle costs

There are two ways to deduct vehicle costs on your taxes. First, there’s actual expenses.

Actual expenses include costs like gas, oil, repairs, tires, insurance, registration fees, licenses, or lease payments. But if you use your car for personal and business use, you have to figure out what portion of those expenses are for business.

That’s definitely not my preference. Expense tracking + complex math—I’ll pass.

The second option, which I prefer, is the standard mileage rate. The IRS calculates maintenance, fuel, wear-and-tear, etc. and sets a per-mile rate that’s used for the entire year.

All you do is track all the miles you travel for business—every interview, meeting, trip for office supplies, literally EVERY mile. And just multiply by the rate.

For 2025, the standard mileage rate is 70 cents per mile, up 3 cents from 2024.

So, let’s say you drive 500 miles a month for business—that’s $4,200 in deductions.

Software Subscriptions

Another source of deductions is business-related subscription fees.

If you’re anything like me, you have a list of subscriptions linked to your freelancing business. Think Adobe Creative Cloud, Canva Pro, Grammarly, GoDaddy, and Dropbox.

Then, there are platform and social media subscriptions, like Medium and X.

And, are you paying for AI tools like ChatGPT?

Don’t let any of those costs fall through the cracks of your expense tracking.

Until you start keeping tabs, you may not even realize you’re spending hundreds a month on subscriptions, which could be thousands a year deducted from your income.

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Financial fees

Fees for PayPal, Stripe, Cash App and credit card processing plus banking fees for your business transactions can also seem like small amounts when you think about them individually, but add them up over a year, and you can come out with a tall total.

The bottom line is tax deductions can have a major impact on your finances. Start tracking them!

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