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As a freelance writer, youre already busy juggling your writing assignments and securing more work. The last thing you need to worry about is getting yourself into a situation where youre facing legal trouble.
Figuring out your taxes as a freelance writer can be tricky, but its not impossible.
In this post, well reveal our top five tax tips to ensure you get it right.
1. Get the Skinny on Self-Employment Taxes
You may not have the CPE hours required to be a tax professional, but you should still know the basics of how the US tax system works.
For example, do you know the difference between being self-employed or being an employee? If youre employed by a company, your employer pays up to half the taxes you owe, usually around 7.65%.
But as a self-employed independent contractor, youre responsible for all your taxes. Experts recommend setting aside at least 30% of your total earnings for tax time.
2. Occupation or Hobby?
Are you a full-time freelance writer? Or do you have a day job and you simply do a little writing on the side?
If your writing is infrequent or just an occasional income-producing venture, you can deduct your expenses only to the extent of your income. In short, you cant deduct more than you earn.
Its it up to each individual (this means you) to make an honest determination of his writing. Is it truly your business, or is it just a hobby?
3. Determine Your Deductions
Ah, deductions. These are the tax tips everyone waits for.
The short answer is theres no one-size-fits-all solution for everyone. If you have a dedicated space in your home for your writing, you may be able to claim a home office deduction.
If your writing requires you to travel for research, you may be able to claim expenses for travel, meals, and accommodation. The key is to do your research and determine what youre eligible forand what you arent.
4. Stay Organized
Wheres the receipt for this? Where did you put the form for that?
Dont wait until April 14th to organize your records and receipts. Stay organized throughout the year by keeping detailed records of your income and expenses.
Use a program like Excel, Quicken, or Quickbooks. Have a dedicated place to store receipts, forms, and electronic files. That way, when its time to file, youll have everything you need at your fingertips.
5. Know Your Forms
When youre employed by a company, you generally receive a W-2 tax form. These are straightforward and easy to understand.
As a freelancer, youre entering a whole different world. You may have several (even dozens) of 1099 forms to juggle, depending on how many writing jobs you had.
Youll have to fill out a Schedule C form to determine what taxes you owe and what deductions you can take. If youre unfamiliar with these forms and terms, use tax software or consider hiring a professional to help.
Tax Tips and More
Armed with these helpful tax tips, youre one step closer to filing and getting another tax season behind you.
Of course, these arent the only things you need to know as a freelance writer.
We invite you to browse our latest writing posts for more advice on all things writing.
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