Sunday, March 5, 2017
4 Strategies to Make Tax Time Less "Taxing"
Jumping into the freelance writing world can be scary for a number of reasons, but taxes shouldn’t be one of them. As long as you keep clear records of all of your spending and income, you will have very little issues when the 1099s start flowing in.
From your very first guest post that brings in a check, track it for your records. Different contractors have different preferred methods for tracking their income. Some use a simple spreadsheet, but when you are pumping out 3-5 articles a day for numerous different clients, things can get a bit messy.
Try one of the new apps on the market that have been designed to make your life easier when tracking funds coming in and going out, like Quickbooks Self Employed app or something similar. These management tools enable you to link the app to your various bank accounts and credit cards that you use for your business and categorize them as they happen.
Deductions, Deductions, Deductions!
As a freelancer, you have the ability to “write off” many of the costs and expenses that you take on while running your business. By writing these expenses off, it reduces the amount that you owe when taxes are due by claiming them as operating costs.
These deductions run far and wide from meals and coffee with clients to gas mileage. If you find yourself driving to meet clients to discuss projects, you will want to track your mileage and claim that as one of your major deductions. Don’t be afraid to be the one to pick up the tab at the coffee shop meeting either. Keep your receipts or track them on your app to add it to your deductions.
If you use an accountant, bring every single receipt that you think can be connected with your business. If you decide to use a DIY tax service such as Turbotax, the software will walk you through all of the potential deductions that you may make. Some of these miscellaneous costs include phone bills, advertising costs, health care premiums, website domain fees and more.
One of the joys of working as a freelance writer is getting to work from home. If you do the majority of your work from a room in your house that you use solely for writing, you have the ability to write off the mortgage or rental costs of that space.
You can also write off the home or rental insurance, utilities and wifi.
Paying Quarterly Taxes
This can bring you some relief instead of facing potentially owing a large lump sum right after the holidays. You can utilize one of the many apps or your accountant to pay quarterly taxes based on estimates of your income over the course of the year. Self employment tax is 15.3% of your income that goes towards paying Medicare and Social Security taxes.
Leave it to the Pros
If anything makes you nervous about doing your taxes, just leave it up to those that do it best. Save all your receipts and collect all 1099s to simply hand them over to a tax expert to help you out. They may be costly but it may end up saving you more money down the line by avoiding a tax audit.
W.M. Chandler is a Colorado native and works best with her head in the clouds. She is an avid researcher and enjoys writing about unfamiliar subjects. She writes passionately about nature and the outdoors, human connections and relationships, nutrition and politics.