If you are self-employed and work from home, almost anything you spend in the course of your work is a deductible expense. They key point appears to be in the course of your work. Paul Michael at Wise Bread notes that if you go to a movie it isn't deductible. But if you go to a movie and review it for a blog that is part of your business, then it is.
Even in this electronic age, it is still important to keep receipts for everything. No doubt the great eye of the IRS is going to be looking at home-workers a lot more closely as they become a larger percentage of the population. As I used to be an architect with a last name starting with A, I have attracted three audits in my career and they are not fun. Good record-keeping, neat files and an accurate and regular use of money management programs like Quicken will make a big difference if they come after you.
Paul at Wise Bread has put together a list of 101 tax deductions for bloggers and freelancers that is interesting and thorough. Some are obvious, some are unusual and some are probably audit bait. (like writing off your dog as security? seriously!
- Business podcasts
- Public internet access fees (Internet café's, airports etc)
- Web cameras
- Anti-virus and anti-spam subscriptions
- PayPal and Western Union fees
- Business furniture. If you use it exclusively for your blogging or freelancing, then anything from a chair or filing cabinet to the whole desk can be written off.
- Clothing and accessories. If you have to buy any clothing for a particular job (maybe you needed protective clothing and headwear to write an article about a building site) then those costs are also deductible. But don't try and write off your new Gucci watch.