Self-employment gives you a litany of tax breaks that aren’t available to employees. But many require that you take action before year-end if you want to claim them on 2019 returns.

Even with the chaos of the holidays, taking a few minutes to think year-end tax tips when you’re self-employed is worth the effort. These moves can save freelancers thousands.

Year-end tax tips for freelancers

What do you need to do before year-end?

Mainly buy things; fund retirement and health care plans; and pay for stuff that you’ll use in the coming year.

Office equipment

Paper, pens, printers, computers, your new standing desk are all deductible businesses expenses. So too, is software and planning tools like the previously mentioned daytimer. If you buy them before year-end, they’re deductible on 2019 returns. If you wait a few weeks, you’re deduction is postponed for a year. 

We mention the daytimer specifically because the Internal Revenue Service is getting tougher about keeping “contemporaneous” records, says David Du Val, chief customer advocacy officer at TaxAudit. You will need something to keep track of your expenses as they happen in 2020. Besides, if you keep a running record of what you’re buying, the miles you’re driving for work, and your travel and meal expenses, you’ve got a better chance of remembering all your expenses to claim them at tax time.

Big-ticket items

If you need big-ticket items — a more powerful computer; heavy equipment, or maybe a new truck for your delivery business — new rules allow you to write off most of these expenses in the year that the new equipment is put into service. However, that doesn’t mean you have to pay for it in one lump sum. You can finance the purchase and still take the deduction for the full cost. (Be sure to consult a tax advisor before making any major moves. The tax code is complex and missteps are easy.)

Moreover, if particularly large expenses cause your business to post a loss for the year, you can carry that loss back and claim tax refunds for previous years when your business was profitable. 

Pay your kids

The tax code is vague on what specific business expenses are and are not deductible, expecting you to determine what is reasonable, customary or necessary for your own business. However, tax rules make it clear that business owners have the right to hire their own young kids and deduct their pay, without the need to pay Social Security and Medicare taxes on these wages. This allows the business owner to move some income out of his or her high-tax bracket into a child’s likely zero-tax bracket. ,

The catch: Your child really has to work and his or her pay must be appropriate for the job.

What would you hire your kids for? One realtor hired his toddler to “model” in all of his advertising, paying her generously. Other business owners might hire their teens to handle social media accounts, provide tech support, or help in the warehouse.

Pay should be reasonable for the work, but if you’d pay an adult $25 or $30 an hour for the same work, it’s not unreasonable to pay the same amount to your offspring. And, given that you’re a parent, in addition to being an employer, you can require your kids to save a good portion of their wages for college.

Health plans

If you have a high-deductible health insurance policy, you can set aside up to $3,500 per person ($7,000 per family) in a Health Savings Account. Contributions to these accounts are tax deductible and the money can accumulate in them tax-free. These plans are designed to pay out-of-pocket medical bills on a pre-tax basis. However, there is no need to spend the money in any given year. HSA balances can roll forward indefinitely and serve as a sort of supplimental retirement plan.

Retirement plans

If you have a SEP-IRA, you don’t need to fund it by year-end to take the deduction. With this type of account, you can deduct any contribution that’s made before your filing deadline, which is usually April 15th but can be extended to Oct. 15. However, if you have a solo-401(k) or another non-IRA retirement plan, you need to contribute to it before December 31st to claim the deduction.


The gifts you buy for your family are personal expenses and not deductible. But if you buy gifts for clients and prospective clients, you can deduct up to $25 per gift. But you can only deduct one gift per client. 

Recommended reading

For more information about what expenses are deductible when you’re self-employed, check out Why you need a home office and Taxes for freelancers.