How taxing is tax prep for freelance writers?

 

Ugh. It’s tax prep time again. (Hey, I was a literature major.) But I’m ready to dig in.

 

Paperwork can be problematic for wordsmiths.

 That sounds contradictory, but it is absolutely not. Writers tend to be creative sorts. Many of us do best with our verbal skills, even in writing. We may generate pages and pages of material on tons of topics. But when it comes to filing our taxes, we generally come up with a collective shudder.

 

We’ll do it, because we have to, but we don’t have to enjoy it.

 It’s a lot like job estimating, time-sheets, and billing. It's not why we got into this gig, even though it must be done.

 (Sure, financial and technical writers are usually great with numbers and formulas and concrete matters of tabulations and organization. But those of us who lean more towards feature writing or even poetry find tax prep considerably more challenging.)

 Here are a few steps I take to try to stave off the tax prep headache each year.

 

A tisket, a tasket. Throw them in a basket.

 Honestly, that’s how my tax prep begins. And it starts at the beginning of each brand-new year. Every little receipt (from business lunches to postage stamps, parking fees, and even reading materials) goes into a big lidded basket. (It’s actually an old picnic basket, but it fits the bill. Some of these slips amount to puny totals, but they will have to be included when my taxes are filed.

 

Scans are super for quick saves.

 A little scanner sits atop my writing desk, right next to my computer. Before cashing any check I receive, I scan it (the whole sheet, including the info side and the actual check). The same goes for any other business-related hard-copy statements or receipts, as I accumulate them.

 I save them as PDFs and drag them into that year’s tax folder on my PC.

 

Screenshots are lifesavers for self-employed pros.

Sure, freelance writers may receive official tax paperwork when we write for actual companies, even if we’re counted as contractors. We may also draw royalties from publishers, who are likely to provide annual statements we can include in our tax filings.

 But plenty of our work generally comes from a variety of news outlets, websites, and publications. That’s where screenshots enter the picture. In any given year, I might include a pile of these screen captures to support the numbers I will enter on the spreadsheet I prepare for my tax accountant.

 

• Sold a few articles via an online writing community? (Screenshot the earnings.)
• Received a stipend for teaching a writing class or workshop? (Screenshot the earnings.)
• Earned ad revenues through a website or blog? (Screenshot the earnings.)
• Collected an honorarium for presenting a lecture? (Screenshot the earnings.)
• Racked up some royaltied merchandise sales? (Screenshot the earnings.)
• Gained commissions for promoting products? (Screenshot the earnings.)
• Paid for page views on a contracted website? (You get the picture.)
• Done any writing projects pro bono? (Yes, Screenshot the timesheet.)

 NOTE: In some cases, earnings may be documented annually. Often, online publishers list them monthly or quarterly. That requires additional documentation and computation. But it still works.

 Screenshots are also handy for online orders, emails, and other tax-related documentation. As these arise, they go in the current year’s tax folder on the computer (along with the aforementioned scans).

 

The annual spreadsheet is the stuff of nightmares.

 This annual project fills me with dread. It’s usually a single Saturday in February. I clear the calendar and push back the furniture in my home office, so I can sit on the floor in a flurry of paperwork. I print out the screenshots in the year’s tax file on my PC. I sort the piles of receipts.

 Next, I set up my spreadsheet, which I create by using the previous year’s one as a template. I fill in the blanks (income and expenses).

Then I generate the totals. (And perhaps I cringe.)

 Finally, I pack the whole thing up and send it off to my accountant, who excels at picking up the pieces (including me). I know tons of freelance writers who file their own taxes without enlisting accountants. Some have become extremely adept at this. Others swear by tax prep software programs, apps, or other tools. I’m willing to shell out accounting fees, both for the expertise and the peace of mind.

 

My tax accountant is worth her weight in gold.

 She has definitely saved me dollars – and my own hide – more than a few times. She lets me know what I can and cannot claim as business expenses. She prevents me from overlooking deductions I can legally take.

 So hold the phone. I’m digging in.

Image/s: Public domain image

 

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