Editor’s Note: This post was written by Brie Weiler Reynolds, the Director of Online Content at FlexJobs and a contributing writer for 1 Million for Work Flexibility. FlexJobs is the award-winning site for telecommuting and flexible jobs, listing thousands of pre-screened, legitimate, and professional-level work-from-home, flexible schedule, part-time, and freelance jobs. Brie provides career and job search advice through the FlexJobs Blog. Learn more at www.FlexJobs.com.
The deadline to file taxes for 2013 is right around the corner: are you prepared? As a freelance writer, you’re in a unique situation when it comes to taxes. Like all freelancers, there are certain dos and don’ts to consider, but there are also writing-specific considerations.
If taxes are still on your to-do list, here are four tax tips for freelance writers. And if you’ve already done your taxes this year, well done! Check out the fourth tip to help yourself prepare in advance for next tax season.
Deduct, deduct, deduct. What exactly constitutes a business-related expense? As a writer, you can cast a pretty wide net. What you can deduct really depends on the type of writing you do, but ideas include:
- The obvious: business cards, your website’s domain and hosting fees, paper, pads, pens, computer equipment (or typewriter equipment if you’re old-school), your home office expenses, business-related travel and meal expenses, and publishing expenses. Keep in mind that meals and entertainment deductions are limited to 50 percent of their costs.
- The peripherals: health insurance premiums (if you buy your own insurance), books and magazines about writing, writing courses and training, money spent in search of freelance writing jobs or other job search expenses, and business meetings.
- The extras: subscriptions to general or topic-specific magazines, newspapers, Netflix, and other sources if you use them in the course of your work. According to Stephen Fishman, J.D., “This would include, for example, the cost of any magazine to which you may wish to sell a freelance article.”
Your vacation may be tax deductible. If you took trips where you researched, wrote, or otherwise worked while you were on vacation, your travel expenses may be tax deductible. Deductible expenses include airfare and transportation costs, lodging costs, and 50 percent of your meals. Fishman notes, “If you plan things right, you can even mix pleasure and business and still get a deduction.”
Understand updates to the Home Office Deduction. Unlike previous years, the IRS is actually making it easier to take the home office deduction through a simplified deduction option. If you have a home office that is less than 300 square feet, you can claim $5 per square foot in expenses (utilities, home insurance, rent, mortgage, etc.) and not have to show any proof or calculations. For more than 300 square feet, you’ll need to calculate the percentage of all household expenses that come from your home office space.
Make this the year to start keeping better records! If you find yourself filling out taxes every year and wishing you kept better records, now is the time to start. It’s still early in the year, so keep a folder at your desk for paper receipts, start a file in your email account for receipts you receive online, and keep a spreadsheet that tracks everything in one place. Come this time next year, Future You will be very happy that Current You decided to start a simple system for record keeping.
Most people don’t jump at the chance to do their taxes, but freelancers should give themselves enough time and attention to do a thorough job. Hiring a professional or using software like TurboTax can also help make the most of this yearly chore. The tips above should help get you started, but don’t let them take the place of professional advice if you’re unclear on anything. When it comes to doing your taxes, make sure to dot all your i’s and cross all your t’s — you’re a writer, after all!
To make your life easier, here are the Best Online Tax Software Programs for Freelancers