Ugh, it's that dreaded time of year again.  April 15^th is closing in, taxes must be done, and you (along with most other freelancers in the country) are trying to figure out just where to start.  You know that you had income coming in, although you're not quite sure if you know how much or from where.  You think that one or two people you worked for might have sent you W-2 forms, but you can't remember if that was this year or last year "¦ or where you might have put them.  Oh, and that reminds you, you saved a bunch of receipts for work-related expenses that you were pretty sure that you could write off this year; now where were they?

It's tempting to just shirk the responsibility of filing your taxes.  After all, your income comes from so many different places, with so few W-2 forms, and seems so minimal really that nobody is ever going to pay attention to the fact that you didn't file, right?  Wrong.  Freelancers are wage-earning professionals who must pay taxes.  Doing so keeps the stress of having the IRS looking over your shoulder at a minimum.  And doing so professionally improves your credibility as a writing professional.  So, where should you start?

First of all, you need to figure out what you earned this year in income from your freelance jobs.  Ideally, you will have kept spreadsheets with this information throughout the past year so that you can just take a look at them and see.  If that's not the case, start with any W-2 forms you received and paycheck stubs that companies you did work for might have sent you.  From there, you can go into your bank account statements from the previous year and look at your deposits.  This should give you the basic information that you need to be able to determine what your freelance income was for the previous year.  Compile all of this information in one location to get a good starting point for doing your taxes.

Next, figure out what your business expenses were throughout the year.  Again, in an ideal world, you will have saved receipts for all business expenses throughout the previous year and you'll know exactly where to find them.  But if not, starting with your debit and credit card statements should help you to figure out this number.  Go through the statements and figure out what you spent your money on.  Remember that any writing supplies, gas used in the course of business, business phone calls, fax costs, and the like are all deductible.  Compile this information in one location so that you have the numbers you need to do your taxes.

Now that you have this basic information in one place, you can file your schedule C form.  This is what you should use as a freelancer, rather than using the standard 1040 form.  Follow the instructions on the form, using the numbers you've gathered regarding income and deductions for your freelance business for the prior year.  If you find the entire process too overwhelming, consider getting assistance from others in filing your tax returns.  This could be in the form of a professional tax preparation service or it might just mean getting together with some of the other freelancers you know and helping each other puzzle through it.

After you've finished filing your taxes for the previous year's income, you should start prepping for the year that you are already in.  You're on the roll with taxes anyway, you might as well get the income and expenses from this part of the year organized and filed away at the same time.  If you can keep up this kind of organization regularly, you can probably save yourself a whole lot of hassle when it comes time to do taxes for your freelance business again next year.

 

For more information about taxes for freelancers, please visit these 2 pages:

AllFreelanceWork.com's Articles about Finances and Taxes for Freelancers

AllGraphicDesign.com's Freelance Graphic Design Tax Law Information

Technorati Tags: taxes, tax deductions, freelance taxes, self employed taxes, 1099