Essential Tax Tips for Freelance Writers

Tax Act

The career of a freelance writer can be very rewarding. However, the career can quickly lose its appeal when tax time arrives and you owe several thousand dollars. Thankfully, there are things you can do to reduce your tax bill and prevent owing such a large sum at once. The following are just five essential tax tips for freelance writers.

Pay Your Estimated Taxes

This cannot be stressed enough. Freelance writers need to pay estimated taxes in April, June, September and January of the following year. These payments will ensure that you don’t get penalized for paying your taxes late and will help ensure you don’t have a large tax bill come April. There are a number of easy to use resources online that will help you determine the amount of your estimated taxes.

Setup a Home Office

If you’re working from home, you should be able to deduct part of your rent/mortgage and utilities. However, when setting up a home office, it needs to be an area that you use solely for the purpose of your business. This does not have to be an entire room. It may even be a small corner of your home. The biggest thing to remember is to save this area for work.

Understand Your Deduction Rights

As a freelance writer, you can deduct many different things. It may be books you purchased to help teach you how to write a novel or even office supplies. Take the time to find out what you can deduct and how much of a deduction you can take. For example, you may be able to deduct part of your internet costs as long as you have proof of the percentage of time that the internet was used for work purposes.

Keep Each and Every Receipt

It doesn’t do you any good to purchase books, pens and other office items if you don’t keep the receipts. Without these receipts, if you get audited, you will be in big trouble. You need to be able to account for each and every item you count as a business expense. You should also start a filing system that keeps the receipts in order based on the type of expense.

Take Advantage of Deductions

Being self-employed means that you can deduct items that most people might not be able to deduct. For example, you can deduct the cost of health insurance. You can also setup an IRA and deduct up to $5,000 a year. Do your homework and see which items can get you the biggest deductions.

It can be hard to pay your taxes when you’re self-employed, but the good news is you may not have to pay as much as you originally thought. Follow these tips and you’ll have an easier time staying on top of the taxes and getting the biggest return.

About the Author: Wendi Ginter is an accountant who offers tax support to a wide variety of freelancers and small business owners. Make sure you talk to your accountant about any and all deductions you wish to make to ensure you’re listing them legally and properly.

5 Tax Write-offs for Freelancers

Tax Act

2010 is officially over, and you know what that means–it’s almost time to prepare your taxes (cue groaning.) Tax preparation can be a daunting task, especially if you plan to do it yourself.  And for freelancers or self-employed individuals, there may be even more confusion.  Luckily, there is a lot of information available online today to help us all through the process.  Terms likes 1099s, Schedule SE, Schedule C, Schedule C-EZ, will be words you soon become familiar with, if you aren’t already.

Below are 5 great tax write-off opportunities for freelancers and the self-employed.  It’s important to be aware … Read more at 2009 Taxes

Tax Act

2010 is officially over, and you know what that means–it’s almost time to prepare your taxes (cue groaning.) Tax preparation can be a daunting task, especially if you plan to do it yourself.  And for freelancers or self-employed individuals, there may be even more confusion.  Luckily, there is a lot of information available online today to help us all through the process.  Terms likes 1099s, Schedule SE, Schedule C, Schedule C-EZ, will be words you soon become familiar with, if you aren’t already.

Below are 5 great tax write-off opportunities for freelancers and the self-employed.  It’s important to be aware of what tax write-off options are available because, as freelancers and self-employed individuals, you’re paying much more taxes than someone employed by an employer.  Freelancers and the self-employed pay not only the employee share of Social Security and Medicare taxes, but also the employer’s share.

1.    Job Hunting Expenses and PayPal Fees: Freelancers with long-term projects are fortunate in not having to continuously search for new gigs, however, for most freelancers, we’re always on the hunt for more projects to keep the pay-flow going.  This may mean signing up with job boards where there may be a fee to join or a fee to bid on projects.  These are expenses that may be written off.  PayPal fees for accepting payment from clients for work completed may also be written off.  Just make sure you keep receipts and print off all online documentation pertaining to the expenses and fees.

2.   Health Insurance Expenses: If you are buying your own health insurance (meaning you are not part of a health plan offered by your employer or your spouse’s employer), then this is an area that is deductible. Health insurance premiums are costly so this is an area where you can see the biggest deductible from your freelance work income.

3.    Home Expenses: This particularly applies to individuals who work directly out of their home.  A portion of your utilities, cellphone (if used for business), insurance, and mortgage interest may be deducted.  The amount deductible is based on a percentage calculated from how large your office space is within your home.  You’ll need IRS Form 8829.

4.    Research and Technology Expenses: If you are working in a particular industry and have expenses related to research for that industry, such as attendance cost for a conference, a book purchase, a magazine subscription, or something else related, gather your receipts as these items that qualify for tax write-off. Technology equipment, such as the cost of a computer, a printer, and other equipment you use for work also qualify.  And don’t forget about Web site hosting fee and design and maintenance fees, these are also expenses you may write off.

5.    Travel and Transportation Expenses: Travel associated with doing business may be written-off.  Whether the expense is for airfare, hotel, car service, gas, tolls, mass transit, or car payment and insurance cost, these are all expenses you should have a tally of to determine the amount that can be written off.  Business-related travel includes any transportation required to attend a business meeting, to purchase office supplies, to attend an event, and other related-business purposes.  Business travel does not include going to and from work.

Want to know more?  Check out these 50 blogs about taxes!

Wendy Lau is a New York City-based guest blogger for Pounding the Pavement and a writer on the subject of becoming a nail technician for the Guide to Career Education.

Find most updated turbo tax coupons and save money on 2010 tax preparation.