Preparing for Tax Time
As a freelance writer you are responsible for paying income taxes on the revenue you earn from your work. Fortunately, you’re subject to a number of tax deductions that may make life a little easier as well. Here are a few things to keep track of throughout the year. Even if it’s too late to include them on your 2008 filing, you can start keeping accurate records for your 2009 filing.
Financial Fees
Chances are you take a lot of payments through PayPal, MoneyBookers, or some other online payment processing program. If that’s the case, you’re paying a significant amount in fees directly to PayPal (or your vendor of choice) just to use their services. Keep track of the amounts they subtract from your payments. The money you lose as payment to them is a cost associated with doing business and can be written off.
Missing Clients
Did a client run off without paying you? If so, make sure you let your accountant know. He or she will be able to help you determine, based on the type of accounting system you use, whether or not you can write off that unpaid invoice and how to properly report it to the IRS.
Research and Business Expenses
Do you need a copy of the Writer’s Market each year in order to conduct business and find new clients? Do you have to purchase magazines or resources in order to conduct your niche-specific work? Maybe you needed to call an accountant or lawyer for advice. Keep all of your receipts on file as well.
Membership Fees
Do you use services such as Elance, GetAFreelancer, or RentACoder in order to find work? If so, make sure you’re keeping track of your monthly or annual membership fees. These are part of your regular cost of operation and should be considered tax write offs as well.
I’m not a tax accountant or lawyer, so I can’t give you specific lists or advice when it comes to keeping track of your expenses for tax purposes. I’m just giving you a few ideas to keep in mind. If you’re not sure, contact your accountant for advice as to what types of expenses you can expect to write off at the end of the year. Keep the most accurate records possible and tax season will be a breeze!