Doing your own taxes as an independent contractor offering content writer services can seem as intimidating as climbing Mount Everest, at least when you are first getting started. You have to balance 1099s, W-4s and even the new 1099-K in order to figure out what your tax bill will be. One mistake could lead to a massive bill or, worse yet, an audit. Feeling scared yet? Don’t be. Here are some tricks I have learned over the past six tax years.
You must claim every bit of income that comes in for your business, down to the last penny. Yes, even that small payment for page views from that one site you tried last spring needs to be claimed. The IRS has amazing investigative skills, and they will find these payments if you are ever audited.
The beauty of working for yourself is the vast number of deductions you can claim. While it may not seem like you have many as a writer with little overhead, there are several surprising deductions you can take, including:
- Internet access
- Computer equipment
- Paypal fees
- Retirement contributions
- Subcontractor payments
The home office tax deduction is one many skip because it seems complicated, but if you have a home office, you should take it. Keep in mind that if your office is the living room couch, like mine is, you can’t take this deduction. It must be a dedicated office space that you use only for business.
Find New Deductions
When I received a $2,000 tax bill my first year freelancing full time, I became a woman on a mission. That mission was to find as many deductions as possible. Some areas I found you could deduct that I didn’t know of included:
- Clothing and other items donated to Salvation Army
- Payments made to children working for the business
- Work related travel expenses
- Childcare expenses used so you can work
Remember, if the expense is directly related to your freelance writing business, and you have good records about that expense, you can probably deduct it.
Triple Check Everything
Finally, the last tip to remember when doing your own taxes is to triple check everything. It is easy to forget a number or two, as I learned.
One year I got a letter from the IRS indicating I had failed to report a $60,000 income from a 1099 from one of my clients. After I picked up my jaw from the floor, thinking I only wish I earned $60,000 from just one client in a year, I realized that I had, indeed, forgotten to enter the amount on the 1099. Thankfully, I had clear records, because the amount was not $60,000, but rather $600. A simple form was all it took to amend that mistake, but another look at the return could have avoided the problem to begin with.
Yes, you can do your own taxes, even if you are not a CPA. If you have careful records, a good tax program and the right knowledge, it’s really not too bad at all.
Nicole H is a freelance writer available on WriterAccess, a marketplace where clients and expert writers connect for assignments.