A freelancer's business expense cannot be deducted as an employee's expense.

Hi June,

I am a writer. I have a question about Schedule C deductions versus unreimbursed employee expenses on form 1040.

I'll have a significant amount of charitable donations this year, not to mention all the state tax I paid this year that I understand is deductible on the 1040. But I won't exceed the standard deduction level.

What would one need to do to treat indie expenses as unreimbursed employee expenses? I am, after all, an employee of myself, right? Is this smart or dumb? Legal or not?

Thanks! I love your book. Best $13 I've spent in a while.

Rachel
Alexandria, VA


Hi Rachel,

To set the stage:

• Everybody deducts personal expenses on Schedule A.
• Employees deduct all their business expenses on Schedule A.

Self-employeds deduct all their business expenses on Schedule C.

Both Schedule A and Schedule C are part of the Individual tax return Form 1040.

All business expenses may be deducted on Schedule C. Only home office has restrictions based on income.

There are several income restrictions as well as deduction restrictions on Schedule A. Often, depending on income or total expenses, employee business expenses on Schedule A may be lost, that is, you get no deduction.

A deduction on a Schedule C is much more of a tax advantage than the same deduction on Schedule A.

Rachel, to answer your questions:
You cannot deduct self-employed expenses as employee expenses. You may split an expense between employee and self-employed if it is used in both your work situations, a reference book for example.

You say, "I am, after all, an employee of myself, right?" No you are not. You are self-employed. Employees are people on payroll, who have taxes withheld by an employer and receive a W-2 at year-end.

You may be a freelance writer and also have a job on a magazine. In which case you would be both self-employed and an employee.

You might want to read these posts employee vs. self-employed for a better understanding.

Glad my book is helpful. Please tell your friends and colleagues.

Best,
June