Tax Tips Every Freelance Writer Should Follow

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The tax deadline is closing in. Check out my re-post for some tips that every freelancer can use.


Whether you’re new to freelancing or a seasoned entrepreneur, tax season may have you breaking out in a cold sweat. Understanding the tax laws relating to business expenses can be a little intimidating, so here are a few tips I’ve assembled to help you determine what you may be able to claim:

Documentation

Keeping track of your income and expenses throughout the year is critical if you’re going to avoid the last-minute rush to file on time.

I’ll admit that I’m much better with words than I am with numbers, so I hire an accountant to prepare my taxes. Of course, his calculations are only as good as the information I provide, so it’s important that I keep good business records.

There are a variety of methods you can use to record your earnings and expenditures. Here are two I’ve used with great success:

Microsoft Excel—I paid for this software that was included with my Microsoft Office suite. It uses a spreadsheet format that you can customize to fit your business model. I set up two pages—one for income and one for expenses.

While many of your writing jobs may be through just a few companies that will provide a W-2 or 1099 at the end of January, I like to keep a running record of every job I do and my earnings. I generally compare my Excel income statement to the tax forms I receive, including my PayPal statement that identifies every payment transaction. This gives me peace-of-mind that I’m reporting all my earnings and haven’t missed any.

The Expenses tab is used to note everything you’ve spent throughout the year to keep your business running. I’ll break down what those items are in a minute. I categorize like items in separate columns and set formulas to total them, so my accountant can quickly find what he needs to fill out the Federal and State tax forms.

QuickBooks—This powerful software program makes documentation a breeze. Created by accounting professionals at Intuit, it intuitively and accurately tracks your business expenses all year to make sure you get every deduction you’re entitled to at tax time.

This is also a fee-based service, but they offer a free trial to help you get started. It syncs all your entries across all devices, so you’ll never miss a charge when you’re away from your office. 

You can easily record every purchase (even online transactions) manually or download them directly into QuickBooks. Even attach receipt images to the specific expense for future reference. It’s the perfect program at tax time too. All expenses are organized into categories such as Marketing and advertising, Travel and entertainment, or Office expenses and utilities; so your accountant will have everything needed to prepare your tax returns.

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Deductions

The IRS allows numerous expenses for running a business that you may never have thought of, so let me give you a list of items you need to start assembling now:

  • Software programs (especially those used to track your income and expenses like Excel or QuickBooks.)
  • Education—whether you attend seminars, take some online classes or attend a traditional classroom setting, you can take the tuition or fees as a deduction.
  • Cell phone data charges—if you use your smartphone to access the internet, communicate with clients or even write articles, you can expense a portion of your cell phone data charges.
  • Printer ink cartridges—if you’re like me, you print out your work for proofreading and red-lining before submitting to your client. Those ink cartridges are pricey but luckily, they’re also deductible.
  • Stationery supplies—the same goes for the paper, pens, planner and any other office supplies you need to perform your work.
  • Books—whether you need them to improve your craft or for reference materials, you can claim them.
  • PayPal fees—I do some business with clients who reside outside of the U.S. PayPal charges fees to exchange the foreign currency to USD, so I was able to claim those fees as a business expense.
  • Mileage and transportation—while I generally don’t travel for business, many freelancers do to meet with clients, do interviews or collaborate with a team. The mileage and transportation costs are deductible.
  • Office equipment—did you buy a laptop, desk, desk chair, lamp, cordless phone, filing cabinet, bookshelf or other assets for your business? Yep, you can deduct them too.

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Home Office

Now, this may come as a surprise, but if you have a room set aside in your home where you perform your freelance writing work (not just a corner of the kitchen table), you can claim it as a home office. To qualify, it should be a dedicated space with a desk, a chair, a filing cabinet and a computer.

Your tax accountant can give you a clearer understanding of how this works, but a percentage of these house expenses can be deducted and depreciated based on the size of your office as it relates to the overall house square footage.

These are the details I provided so my accountant could complete the proper tax forms:

  • Overall square footage of my home
  • Square footage of my office
  • Age of home
  • Purchase price
  • Annual utility costs—gas, electric and water
  • Annual homeowner’s insurance cost
  • Annual internet cost

You may be more adept at tax preparation than I, but my accountant (the amazing number man) did an itemized breakdown of all my business earnings and expenses plus depreciation for a home office to calculate my freelance writing business taxable income.

My Advice

Who knew that running your own small business could be so complicated?

I was unsure (and a little nervous) the first time I had to pull all of my business tax information together. It was amazing to actually earn money from my writing skills, but then I remembered that Uncle Sam always wants a portion of it. You’ll want to keep as much of your hard-earned money as possible. In order to do that, you’ll need to keep detailed records.

Luckily, I had some really smart people help me compile the information in my first year. They wisely suggested that I track everything from January 1st so I wouldn’t have panic attacks the following April 15th.

Obviously, if you didn’t document all of these details in 2016, things are going to be a little challenging for this tax season. Don’t let it get you down. Print out a copy of this post and start compiling the information. 

Once you’ve got 2016 closed out, get started on tracking information for 2017. Don’t forget to keep all your receipts. Why not give Excel or QuickBooks a try?

You’ll be really glad you did!

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So, was this helpful? Did I miss anything or do you have extra tips that may be helpful to other freelance writers? I’d like to hear your thoughts. Just click “Comments” below.


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5 Most Effective Ways to Run a Business While Working a 9-to-5

Nicole Duggan has touched on some real solutions to a problem I have encountered myself. Working a day job and a night job (freelancing) doesn’t leave much time for anything else.

If you struggle with being in two or three or more places at once, I think you’ll find this post helpful.

http://startupmindset.com/5-most-effectively-ways-run-a-part-time-business-while-still-working-9-to-5/

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Standing On My Own Two Feet…How I Did It With a Broken Leg

Although this incident happened 20 years ago, I’d like to share my story with other women who may recognize the feelings of self-doubt, intimidation, fear of failure, and inability or refusal to “stand on your own two feet” as I felt all those years ago.

I’m here to share with Women Over 50 that It’s Never Too Late to start. You have great value in your uniqueness. You don’t ever have to take a back seat to anyone. And you are good enough to do whatever you choose to do in life.

Here’s my “life-altering” story. I hope you can learn something from my life lesson.

 

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They say that life can change in an instant, and at 37, I thought I already knew what that meant. I had been through a crap-load of life-changing events – love, loss, birth and death – so I was positive I was ready for anything. In the instant it took to slip on my office floor and feel the agonizing pain of a shattered leg, I realized that life’s lessons had just begun.

I’ve always been the leader, the strong one, the one that took charge and definitely the one to fix everything. Taking on the multiple responsibilities of wife, mother and administrative assistant was invigorating most days, and I was good at it. Of course, that didn’t mean I didn’t have my weaknesses. The day started out like any other with me rushing to get to work before my boss arrived. My tardiness had been his favorite reprimand of late, and no matter how much I wanted to conform, I just couldn’t get my ass in gear to get there by 8:30.

The managers had their annual strategic planning session that morning. I had been preparing for that meeting for several weeks before, assembling volumes of statistical data and documentation for the critical goal-setting process. “Burning the midnight oil” would have been a welcome relief as most nights I had worked into the wee hours of the morning to get everything done. I guess you could say I was obsessed with getting every detail perfect. I really suck at math, and I wasn’t any better at it back then. Of course, my boss was a genius with numbers, so making sure every report was 100% accurate seemed critical at the time. While a typo or incorrect percentage may seem insignificant to some, I was also the stenographer (aka note-taker) and had already taken flak during past meetings for mistakes I’d made. The man intimidated me, and the only way I knew how to avoid confrontation was to not piss him off.

I had to set up the conference room before they arrived, so that day I had a plan. I actually got up early, but a stop at Tim Hortons for a pack of Timbits and coffee put me behind anyway. Luckily, when I arrived at the office on that clear September day, the parking lot was empty. My heart was racing, but a quick calculation of the set-up time I had left assured me that I had dodged a bullet and would avoid another scolding that day. As I hurriedly walked into the building, through my boss’ office toward mine, I was juggling all the supplies for the day. As the heel of my pretty little black pump met the over-waxed ceramic tile floor in my office, I slipped. I threw my body forward to try to catch myself, but my leg was overextended and the bone cracked in half.

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To say that it was the most excruciating pain I ever experienced in my life is a colossal understatement. Even a difficult childbirth with no pain meds was a walk at the beach in comparison. My bloodcurdling screams resonated through the hallway and one-by-one my coworkers came running to see what happened. As I lay on the floor writhing in pain, I felt an unbearable vulnerability, and I was terrified that I would have to surrender control. Focusing all my energy on managing my emotions, I didn’t cry. Instead, I gave orders. I’ve always been pretty good in a crisis and this definitely qualified. As long as I was taking care of everyone else, I didn’t have to delve too deep into how I felt, and I could still hide my weaknesses.

As I fought the shock that was quickly setting in, I actually apologized for not being able to attend the meeting. When I think of it now, I realize how ludicrous that must have sounded. Part of me really thought the doctor would throw a cast on my leg, and I’d be back at work the next day. Instead, I had come to one of those crossroads in life where no matter which path I took, my life would be changed forever.

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The sick feeling in the pit of my stomach wouldn’t go away. I couldn’t help but cry out in pain as the ambulance found each bump in the road. And even though I tried hard to concentrate on what the paramedic was asking me, confusion started to set in and a thick haze enveloped me. The next few hours went by with a blur of anxious faces, reassuring voices and pain so unbearable and relentless I would have done anything to make it stop. I desperately wanted to erase the terror I saw in my husband’s eyes when he looked at the damage I had done.

He urged me not to look at my leg and that telepathic connection between husband and wife told me it was best to obey. Still, I clung to the last remaining morsels of hope that once the surgery was over I would be able to get back to normal. Reality hit me like ice water in the face when I had to sign the hospital waiver stating that I could die during surgery. Of course, the doctor’s prognosis wasn’t much better – an open fracture such as mine would require immediate surgery or risk severe infection and possible amputation. It was then that the light at the end of the tunnel went out. I knew normal was out of my reach.

The surgery was successful to repair an open, compound fracture of the tibia (the bone was sticking through the skin), a fractured fibula, a spiral fracture of the tibia that extended into my ankle and nerve damage into my toes. A titanium rod and four screws were inserted to stabilize the bones and start the healing process. After four days in the hospital, I met with the doctor and an occupational therapist who said I was ready to go home. I was sure they were joking because I had the strength of a flea and even the slightest movement felt as if I was breaking it all over again.

My homecoming was filled with equal parts of relief and anxiety. The six-inch porch step loomed in front of me like a concrete mountain. Navigating the obstacle course I easily managed just 96 hours before was now agonizingly slow and painful. Feeling anything but settled in my new home on the first-floor, my husband and six-year-old daughter did what they could to make me comfortable. Day and night blended together over the next few weeks, only separated by four-hour reminders to take pain meds. From my vantage point behind invisible bars, I watched my family manage without me.

The phone calls stopped from concerned co-workers and friends as they returned to their own routines. Over the next few months, doctor appointments became welcome distractions from the monotony that had become my life. As the pain began its unhurried retreat, there was an unforeseen void left behind. Depression and apathy were common expressions in the foreign language I now spoke. Somewhere along the path to healing, I was robbed of my desire to fight. Managing my pain had become so encompassing that I became a willing accomplice in my fall from power.

It was almost easy to let go. Before I broke my leg, I had defined my value as a person by my ability to take care of others. I was the “go-to gal” at home and at work. When I broke my leg, I became totally dependent on others, and I felt useless. My husband was amazing. Thankfully, he took care of everything – me, our daughter, the household chores – and still went to work every day. Unfortunately, he took care of everything, because then I didn’t have to try. I could see how exhausted he was, but he never complained or got upset. Secretly, he feared I’d never walk again and so did I.

Our daughter, Lanie, was only six, but she understood that things were different. She helped her dad and took on household chores that were once my responsibility. I loved her for the effort, but it pushed me further into the abyss.

Occasionally, my boss would check in to see how I was doing. I know now he was trying to reassure me, but his “we’ve got everything under control” did little to make me feel needed or missed.

While I’d always been an optimist and never one to give up without a fight, my lack of mobility and medicated state were easy excuses to feel sorry for myself. As I sat in my recliner day after day watching nonsense television, I began to convince myself that karma was finally setting things right. Even though I had the skills necessary to do my job, I always felt I was one mistake away from losing it. Even at home, I never thought I was a good enough wife, mother, friend, lover, cook, housekeeper or anything else for that matter. The pressure to be perfect was totally on me, but I had lost the will to change it.

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Three months after that fateful day, my 93-year-old grandmother fell and broke her hip. My sister called with panic in her voice to tell me that Gram needed surgery. My parents were out of the country on vacation, and the doctor needed a family member’s authorization to do the repair. Gram had always been a feisty lady, but her advanced age and worsening senility meant we’d have to decide what to do for her. There was a risk of death with or without the surgery, and my first instinct was to close my eyes and let Sis handle it alone. “What could I do anyway? I couldn’t even get to the hospital in my condition.” As I hung up the phone, a little voice inside me begged me to reconsider.

Depression is a powerful foe, but family trumps it every time. I called my sister back that night and together we decided to let Gram have the surgery. True to her nature, she was sitting up in bed a couple days later when I went to visit. She and I compared “war wounds,” and she even challenged me to a walker race. She seemed to have better clarity that day than she had in ages, and I shared my emotional struggles with her. As she had done many times before, she reminded me that “Nothing worth having ever came easily” and that if I didn’t take care of myself first, I’d never be any good to anyone else. Who was I to argue with an old lady?

The next morning I awoke with a new lease on life. It was time to stop feeling sorry for myself and get ready to walk again. I started slowly by exercising in my chair to rebuild my muscles. When she got home from school each day, Lanie would bring me my dumbbell weights to help strengthen my arms. Soon I was able to navigate the house on crutches, even up and down the stairs to the second floor. I couldn’t put any weight on my leg yet, but I rode a stationary bike anyway just to reduce the muscle atrophy that had taken hold.

Gram died peacefully in her sleep a month later. She had recovered enough to return to her apartment at the senior home and had spent the night before making cookies with some of the other residents. I kept my final doctor’s appointment that morning as I was scheduled to get the final cast removed. With a heavy heart, I shared my loss with the doctor. While he was sympathetic and suggested we reschedule, he agreed with her that I had to take care of myself first. He reassured me that her fall and subsequent surgery were likely not the cause of her decline, but a symptom of an underlying problem. I took great solace in his remarks and felt some satisfaction when he complimented me on my remarkable muscle tone. I attributed it to strong family genetics. Ten months of physical therapy began the next week and I learned to walk again.

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Life at home took on a new normal where I asked for help on occasion and lightened up on making sure everything was always perfect. I returned to work part-time while I continued my treatments. Before stepping one foot inside my office, I insisted the company install carpeting over the ceramic tile floor. While my boss was anxious for me to return to full-time duty, I held my ground in not returning until I was ready.

My boss still intimidates me a bit, but I’ve learned to trust my skills more and worry less. I’ll soon be celebrating my 31st anniversary with the company, and I’m happy to report that I still have both feet firmly placed on the ground – all thanks to a broken leg.

 

Have you ever been through a trauma that changed your outlook so drastically? Were you able to recover or do you still struggle today? Exposing my vulnerability is hard to do, but I’m hoping that sharing my story will help others feel less alone.


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