Because most tax cheats fall under the category of self-employed, it’s really no wonder the IRS keeps close tabs on freelancers. Many of my freelance buddies worry about being audited, but here’s the thing: if you’ve done nothing wrong, you don’t have to sweat the audit threat.
Keep records and receipts.
In the event of an audit, your documentation will save you. Stay well organized and keep proper records throughout the year, and you’ll have nothing to worry about come tax time or in the event of an audit.
Report all your income.
Even though your clients aren’t required to report you as an independent contractor unless you’ve earned $600 or more dollars in one year, you’re still responsible to report this income to the IRS. A few dollars here and there add up, and the IRS is more than aware that many freelancers earn their money one small job at a time.
Don’t go dishonest deduction crazy.
Obviously, don’t try to claim deductions for things you didn’t really pay for. But beyond that, use common sense in choosing what to claim. The IRS might let a hundred dollars worth of magazine subscriptions slide for a freelance writer turning a decent profit. If you’ve never sold an article, the IRS will wonder what five hundred dollars worth of magazine subscriptions are being used for. As long as you’re prepared to prove what you use should an auditing agent pay a house call, you have nothing to worry about.
Want to learn more about paying taxes as a freelance writer?
We’ve got some great articles at write-from-home.com:
How to File Taxes as a Freelancer: An Overview By Katharine Swan
Filing Taxes as a Freelancer: How Deductions Work By Katharine Swan
Taxes for Writers: Paying Your Estimated Tax By Katharine Swan
Paying Taxes as a Freelance Writer By Patricia Telesco
{ 5 comments… read them below or add one }
This is excellent advice, Amy. It’s true, we need to be honest. That’s the key.
Popping back in…
Maybe the question I’m about to ask will inspire your next post, or maybe you can just answer with a comment.
Which laptop(s) do you recommend for a freelance writer? I’m finally taking the leap to invest in one and I’m wondering what the best options are. A lot of folks are saying Dell is the best and to go custom with that (which adds up!)
So, what kind of laptop would you tell freelance writers to start out with? Any programs that are vital? Should we go custom or just buy off the shelf?
I know you’ll have excellent answers
Thanks so much!
Timely, excellent post, Amy! I hate to death the tax season. It’s when I consider moving to Socialist countries…
Michele, great question! I’m using a borrowed laptop. My husband’s company has them sitting in closets since they upgraded. He signed one out and I’m using it until they want it back or I get my own. For now, it’s all I need.
Hi Michele and Lori,
I tend to burn out a laptop every year or two, so I don’t invest in anything expensive anymore. I’ve had a Dell and an HP, both of which burnt out in a year. The Acer (much cheaper) I have now has lasted twice as long as the past two, and I have worked a lot longer hours this past year.
My advice is just to go with what you can afford. If you use your laptop for personal use as well as for business use, you won’t be able to claim the full price on your taxes, so it will be coming out of your own pocket.
I know some freelancers do claim their computers, but I don’t, because I don’t feel it would be ethical for me to do so since I use my laptop for everything (not just work).
As for programs, microsoft office and a pdf creater, as well as an image editor and html editor are the only things I use for work. Other than Office, you can get those for free.
Maybe others will have more helpful input.
Thanks a million (both Amy and Lori) for your input on the laptops! You’ve both confirmed my suspicions that the most expensive isn’t necessarily the best route.
Amy, I can’t believe the least expensive has lasted you the longest. That is such great news! And… I’d be using my laptop for everything, too, so I’m remaining ethical as well :0)
Smiles,
Michele
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