Taxes and Freelance Writers-What to Do

When you decide to take the plunge and make freelance writing your career there are many things you must consider. Not the least of which is how to handle your taxes. Since you are now your own boss, you are responsible for ensuring that you are reporting everything to the IRS.

The tax laws are ever changing, so the first thing you need to do is check for the most up-to-date tax information before you file. If you have questions regarding this, you can call your local tax office, or you can consult an accountant. The key to ensuring that you have all the information you need when it comes time to doing your taxes are to make sure that you have kept accurate records throughout the year.

Keeping Records

When speaking of keeping records, there are two key things to keep in mind, 1. You should keep records of your expenses, 2. You should keep records of the income you've earned. There are several ways you can go about record keeping, and you can choose the way that works best for you but here are some different examples of ways you can do it. You can get a ledger and record your income and expenses in two separate columns. You can either keep a monthly record or weekly record, you can even itemize each expense and payment if you'd like. It doesn't really matter, just as long as you are keeping accurate track of both. Or you can keep a running total on an excel spreadsheet, again pick they way that works for you, or come up with your own plan. Just make sure that you do it.

If you are making a profit from your writing, you pay income taxes. Magazines don't take out any deductions so paying the government is up to you. You can deduct any expenses you've incurred as long as you are considered a "working" writer. A "working" writer is somebody who has made a profit from writing three out five consecutive years. So what are considered expense deductions?

Deductions

Simply put an expense that you can deduct on your taxes is anything expense you have incurred that is related to your writing. But, before you deduct anything, make sure that you have the receipts or cancelled check of the items you purchased in order to prove it was a writing expense. Some examples of items you would be able to deduct are; paper, envelopes, pens, ink cartridges, computer disks, file folders, postage costs, and even long distance phone calls that are related to your writing. You can even deduct driving costs if you need to drive anywhere related to your article. Next you need to think about how you are going to handle the income you have earned.

Earned Income

There are many different ways nowadays that you can get paid, either the old-fashioned way by check, or direct deposit into your bank account, or the ever popular pay-pal. The most important thing to remember here is that keeping accurate records of your income is vital. This is what the IRS is going to be most interested about and how you will know how much you owe the government at the end of the year. If you find that it is all a little too overwhelming for you, you can contact a financial consultant to help you figure it all out.