How to maximize tax refund as a home-based, self-employed creator (2023)

How to Maximize Tax Refund as a Self-Employed Creator (2023)

Instead of filing 1040s on your own, or taking standard deductions, you can maximize tax refund as a home-based, self-employed creator and freelancer without hiring an account, or spending hundreds or over a thousand dollars in tax return.

Disclaimer: I am not an accountant. This article should not be taken as professional accounting advice.

What’s the Tax Software That Can Guide You Through the Filing Process to Itemize and Maximize Tax Refunds?

TaxAct offers an incredible feature for content creators and small business owners who use part of their home for business purposes to maximize their tax refunds.

Ongoing offer

Get started with this link to get a 20% discount when filing taxes.

How Does Taxact Work?

Through a set of modules with step-by-step instructions, you’ll be able to enter all the qualifying home expenses including but not limited to electricity, heating oil, water, and property tax, alongside the percentage of your business use of home (compared to your total living space), and TaxAct will automatically calculate and maximum deductions and refunds for you.

Should I Do My Own Taxes as a Self-Employed Person?

Yes and no. I’m a DIY type of person and generally enjoy learning about business and accounting. BUT the first year or two can be tough. Tax return isn’t straightforward for small business owners and content creators. I think it’s a good idea to work with an accountant if you are a new business owner, or you’ve made painful tax return mistakes in the past. With that said, I’ve since then moved on to doing taxes on my own with a system that’s worked out really well for me, which I’ll be discussing in detail as part of this home-based creator tax return series. TaxAct has helped me tremendously and is my go-to tax software since 2015.

What Is “Business-Use of Home”? Why Is This Feature Important?

The business part of your home must be one of the following:

  • Your principal place of business,
  • A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, OR
  • A separate structure (not attached to your home) you use in connection with your trade or business.

As a home-based creator (blogger, YouTuber, podcaster, etc.), our homes are natural extensions of our work, where we film, write, collaborate, and meet with clients. Like most of you, my home is where I conduct most if not all my business as a content creator and marketing consultant.

Working from home has become a norm during the pandemic, where creators traveled less to do work at a Starbucks or a co-working place. Home is better, cheaper and even safer in many ways.

How Do I Deduct Expenses From Home?

First, the old and painful method:

Traditionally, it’s quite painful to go through home expenses, and there are a lot of annoying grey areas. Typically you’d calculate the areas that are considered as your primary workplace. i.e. your office or studio, but not the living room or dining room for obvious reasons. This can be a little different for creators, where we use multiple areas of our homes for creating content (primarily for visual interests), but it has to be a location that you use regularly as part of your business.

  • Step 1: You calculate the square footage (or meters) and divide that by the total living space in your home. You now have a percentage – such as 1/2, 1/3, 1/4 or whatever it may be the business use of your home.
  • Step 2: Calculate each individual qualifying expense – electricity, heating oil, real estate taxes, and so on, each multiple by the percentage from Step 1. You then enter that number into the appropriate box of your tax software. I’m simplifying the process already because rules for business deduction might change year after year.

What a pain! Each time you enter a line item, you fear you could be doing the math wrong, or somehow entering a disqualifying expense, or completely missing out on deductions. It’s messy and likely will cause you a headache.

The NEW, and much better method introduced by TaxAct this year allows you to go through a simple questionnaire for all the qualifying home expenses (in total, not a percentage you have to calculate on your own). No need to pull out your calculator each and every time you try to calculate an expense item.

It’s super simple which does not leave you frustrated or confused.

Here are a set of screenshots I grabbed from TaxAct before I finished my tax return this year. Please note that the screenshots are partial to what’s relevant to my business, and you may be seeing more/fewer categories based on the nature of your business setup.

Get started with this link to get your 20% off when filing taxes.

Which plan under TaxAct is right for self-employed?

TaxAct in 2023: Maximize Tax Refund

The Self Employed option is more expensive than the others, but it comes packed with questions that are most relevant to freelancers, creators, self-employed, and small business owners. I’ve been using this version since I started Feisworld LLC in 2015 and never looked back.

And it’s half of the cost compared to TurboTax.

More Reasons to Try Taxact?

TaxAct stores all your previous year’s tax return information for comparison and reminder purposes. You’ll receive a warning when something appears off or drastically different than your prior returns.

TaxAct is cheaper than several other popular tax return software in the market, including TurboTax. I’ve tried TurboTax in the past but find TaxAct to be more user-friendly and simple to use.

TaxAct is also free to start and pay when you file.

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