Top 10 Overlooked Tax Deductions for Freelancers in 2025
Most freelancers leave thousands of dollars on the table every year. Here are the deductions you might be missing and how to claim them properly.
As a freelancer, maximizing your tax deductions is one of the most effective ways to lower your tax bill. However, many independent contractors miss out on legitimate write-offs simply because they don't know they exist. Here are the top 10 overlooked deductions for 2025.
1. The Home Office Deduction (Simplified vs. Regular)
If you work from home, you can deduct a portion of your rent or mortgage, utilities, and insurance. The simplified method allows $5 per square foot up to 300 sq ft ($1,500 max), while the regular method requires tracking actual expenses.
2. Health Insurance Premiums
Self-employed individuals can deduct 100% of their health, dental, and long-term care insurance premiums for themselves and their dependents. This is an "above-the-line" deduction, meaning it lowers your adjusted gross income directly.
3. QBI Deduction
The Qualified Business Income (QBI) deduction allows eligible self-employed individuals to deduct up to 20% of their qualified business income from their taxes. This is a massive potential saving that many miss.
4. Software & Subscriptions
Adobe Creative Cloud, Microsoft Office, project management tools, and even Spotify (if used for business) are fully deductible. Don't forget cloud storage and domain hosting fees.
5. Professional Development
Courses, webinars, books, and conferences related to your field are deductible. If you're a designer taking a UX course, write it off.
6. Business Meals
In 2025, business meals are generally 50% deductible. This includes meeting clients for lunch or ordering food while working late on a project.
7. Transaction Fees
PayPal, Stripe, Upwork, and Fiverr fees add up. If you earned $10,000 but paid $300 in fees, you only pay taxes on $9,700. Make sure you deduct the gross income, not the net.
8. Phone & Internet
You can deduct the business percentage of your phone and internet bills. If you use your phone 60% for business, you can deduct 60% of the bill.
9. Contract Labor
Did you hire a virtual assistant, a graphic designer, or an editor? Payments to other freelancers are fully deductible expenses.
10. Start-up Costs
If you started your business this year, you can deduct up to $5,000 in start-up costs like market research, advertising, and business registration fees.
TaxWatch automatically scans your transactions for these deductions, ensuring you never miss an opportunity to save. Start your free trial today.