5 Tax Tips for Freelance Writers & Bloggers That Can Save Thousands

The following is a guest post.

We’re almost at the end of the physical and fiscal year. Thankfully, for accounting purposes, the last couple of weeks in December are a bit slower than normal in the freelance world. Clients take a couple of weeks off and we get time to spend with our families. So, it’s the perfect time to discuss some tax tips for freelance writers — things you should be doing now that can save you a lot of money come tax time. 

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If you haven’t been paying attention all year, this can be a stressful time. Determining what you have to report, what you owe, and how much money you should spend to be over your standard business tax deduction can be tricky. On top of all that, the tax code, especially for small businesses, changes every year.

You can enlist the help of an accountant, but the more prepared you are as a freelancer, the less you may have to pay in taxes.

5 Tax Tips for Freelance Writers That Can Save a LOT of Money

Here are some common tax tips for freelancer writers that I’ve learned along the way; things that can save you literally thousands of dollars as you prepare to face the looming tax deadline.

I. Categorize Your SpendingLearn How to Start a High-Paying Online Writing Career (You'll Probably Pay More in Taxes, but You'll Be Earning More Too! )

If you use a banking app or another bookkeeping app, be sure to keep up with categorizing your spending.

You can create rules that will automatically apply to transactions as they come in, but as you have new clients and expenses, this won’t always work for you.

Keeping this up to date keeps you from having to go back and categorize things later, and trying to remember if a dinner or a purchase was personal or business.

The simplest way to do this is to have a business and personal account, and never mix the money in the two. If you do, do so as rarely as possible.

Having a completely separate account means that all of your expenses from that account can be marked as business deductions or business income.

II. Know What You Can & Can’t Deduct

If you talk business at a diner, that can be deducted as a business expense. If you are a freelance writer, dinner with your writer’s group is for sure deductible. So is travel if you write about it.

Freelance Tax Tip Hint: Always, always, always find a way to write about your trips. Even if you just do a blog post and stick some affiliate links in. That counts because you’ve “monetized” that post, which could potentially earn you income.

There are more obvious deductions. If you buy a new domain name or start a new blog, all of the expenses associated with it are tax deductible provided you are using it to make money in some capacity.

Whether that is through affiliate links, Google ads, Amazon native ads, or selling your own goods online, if you are using it to earn income, you can also deduct expenses, including monthly hosting, premium plug ins, and even content creation if you pay others to do it for you.

All of the equipment you use for that blog is tax deductible too. Computer, monitor, web cam, microphones (for podcasts), and even desks and desk chairs are fair game. Essentially anything in your home office.

Speaking of your home office, if you have a space dedicated to your business and the work you do at home, that space is also tax deductible. This includes part of your utility bills, your internet costs, and more. Be sure to consult your accountant about your specific situation, but knowing the square footage of that room and what percentage that is of your home is a good start.

As a freelance writer, always find a way to write about your trips to make them tax-deductible. Click To Tweet

III. Meet or Exceed Your Standard Deduction

In 2017 single taxpayers and married taxpayers who file separate returns can claim a $6,350 standard deduction. For married couples filing jointly, the amount is $12,700, and taxpayers filing as “head of household” (single individuals with dependents) can claim a standard deduction of $9,350.

Paying Freelance Taxes: Should You Itemize or Not?

No matter what the amount, your spending should meet or exceed that if you are going to itemize deductions. Why? Otherwise, all the time and effort you spend categorizing and listing business expenses is a waste: you are better off just taking the standard deduction.

This, of course, depends in part on how much money you are making freelancing. However, if you are not making enough to spend more than the standard deduction, you might want to relook at your business (another topic for another time).

This is why businesses often make big purchases in December. You are getting those last few deductions before it is too late, and they roll on to the following year. At the same time, if you have already met your standard deduction and you are facing a major purchase, you might want to roll it into the following year to help you meet that year’s deduction.

If you pay others to do any work for you (ie, outsource) — from graphic design to book covers and editing, or even writing for your blog — be sure to send them a 1099 so that you can deduct that money as a business expense.

You can still list these expenses without sending them a 1099, but the other person is responsible for reporting them on their taxes, and this can increase your risk of being audited.

IV. Pay Yourself ProperlyWhy HostGator is the best web hositing company for freelance writers (IMO)

Want your business income to count as personal income, especially when you go to apply for a home, car or other type of loan?

Be sure you are making transfers from your business to your personal accounts and labeling them “salary” or cutting yourself an actual payroll check.

This not only helps your business by showing your salary as a deduction, but it also helps you personally to show income, often a challenge for freelancers and solopreneurs. You can still get loans without proof of income, but usually you interest rate (and therefore payments) will be much higher.

When you freelance, pay yourself a salary to make qualifying for things like home loans easier. Click To Tweet

V. Get Organized

You can do your small business taxes yourself, but you are often much better off with an accountant, who knows laws and can find you deductions you might miss on your own or using tax software. It can also be a very time-consuming process, time you could use on building your business.

The key to success in this area is to be organized. Have your spending properly categorized. You can often share that information with your tax accountant directly or export it to a spreadsheet they can use.

Know your deductions, the space you use in your home, the number of miles you have driven for work, and what your utility bills run each month.

Gather all of your receipts or bank statements before you even approach your accountant. If you need to spend additional money by the end of the year, have some items in mind that you could legitimately use.

Your accountant can cover even more tax details with you, but essentially you need to know at least the basics going in: categorize spending and know your deductions. Meet or exceed your standard deduction, and pay yourself properly. Be organized, and you will save a lot of money when you approach a good tax accountant.

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Tax Tips for Freelance Writers: Conclusion

I’ve learned these things the hard way. Take a lesson from an experienced freelance writer and get ready. Tax season is right around the corner. As a freelance writer, there’s no better time than now to get prepared for it.

About the Author: Sarah Saker is a business coach and freelance writer that specializes in helping SMBs setup processes for customer support and predictable growth. When not writing or coaching, Sarah can be found on her (small but growing!) family farm. Connect with Sarah on about.me for coaching or writing help.

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