The dreaded taxes! These income tax tips for freelance writers and bloggers will help you get your money and taxes sorted out. If you’re earning money as a freelancer, blogger, or web writer, then you need to know these simple income tax tips. They include the basics of bookkeeping for a small business, and they’re best not left until tax time. Here, Ethan Ewing of Bills.com shares his tax tips for writers who make money.
“Now is the time to take action,” Ewing says. “To get the most from your tax planning, it’s wise to take a step back and understand your tax position before the end of the calendar year.”
Careful income tax planning can increase a writer or blogger’s take-home pay by hundreds of dollars. It’s not difficult to apply these simple tax tips for freelancers, but it does require a bit of organization. If you’re making money as a writer and do your own taxes, click TurboTax Home & Business Federal + e-File— it’s tax software that will ease your pain. And, read on for several tips for paying taxes for writers and bloggers…
Income Tax Tips for Freelancers, Bloggers, and Online Writers
1. Organize your taxable income and expenditures. Before the year is up, make sure your invoices and earnings are organized. Spend a few minutes every week sorting and compiling information to lessen the burden come April — it’s simple when you apply basic bookkeeping tips for small businesses. Staying organized all year round will ease your pain at tax time.
2. Do a test run of your income taxes. Obtain a copy of last year’s tax form and complete it with current data to estimate this year’s obligations. If you used income tax return software, then you can use that. Or, go to the American IRS website and search for the form, download a version, and fill it out.
3. Maximize tax deductions. As a freelancer, blogger, or online writer, your deductions will come in a variety of flavors! Review your options and previous years’ tax returns to understand which options might apply to you as an entrpreneur. Check with a tax advisor to make sure you’re making wise choices. Some items to consider:
- Plan donations to nonprofit organizations of money, old or unneeded vehicles, clothing and household items, or stocks or other investments. Obtain any appraisals or valuations needed to list these contributions accurately, per IRS guidelines. Make any planned donations before Dec. 31 to ensure they are received and logged in time to count for current deductions. It’s easy to delay until it’s too late, or forget about them once the holidays start.
- Check flexible spending account balances. If a balance remains unused, check whether you can make relevant purchases to use the money before you lose it. Consider purchasing medications or contact lenses, seeing the dentist, or investing in any other needed medical or dental care.
- Check health insurance deductibles and medical expenditures. If an expensive procedure is on the horizon and you have reached or nearly reached the deductible, consider scheduling the procedure in 2008 rather than 2009 to maximize benefits. Similarly, medical and dental expenses that total more than 7.5 percent of adjusted gross income are usually tax deductible. If expenses are near that benchmark, consider receiving other needed care to be able to deduct some of these costs.
- Check your retirement contributions. Greater savings means greater income tax deductions (to the extent regulations allow). And with stocks low, it could be a great time to invest for the future. This income tax tip may be a stretch for struggling freelance writers, but it’s worthwhile in the long run!
- Pay ahead on student loans. If you have not maxed out deductible student loan interest, paying extra on loans might offer additional deductions.
4. Estimate how the economy will impact your taxes. Many self-employed writers estimate earnings for the upcoming year to sketch out estimated income tax payments. If you’ve lost writing jobs, you’ll probably owe less taxes. To stay on top of your taxes as a freelancer, figure out in advance how much money you’ll owe and when, so you don’t put yourself in a bind by paying too much in estimated taxes early in the year.
5. Get help with your income taxes if you need it. “If you owe back taxes, or if you’re afraid that you won’t be able to pay your taxes this year, seek help from tax debt resolution specialists who are skilled in dealing with the IRS,” says Ewing. Hiring a small business accountant or bookkeeper may be a wise investment in your writing or blogging career.
If you have any questions or comments about these income tax tips for freelance writers, please share below…
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For more info on taxes, bills, and budgets, visit Bills.com.