The Freelance Business Tax Break You Didn’t Know You Had

This post is sponsored by Outright — Your Livelihood, Right Now.  Getting your taxes right with free bookkeeping.

by Joe Wallace

Some bloggers and freelance writers like me who specialize in finance writing are afraid to go on the record about giving tax advice. They issue these disclaimers saying, “this is not tax advice”.

And while I am not a tax professional, I do believe a writer should stand by their words or don’t write them at all–I’ve got the guts to say this is tax advice, plain and simple. It’s advice, it’s about taxes, and I’m giving it. And there’s no possible way to get into trouble taking this advice–in fact you might get the exact opposite effect. The IRS may actually like you better for doing it.

And yeah, transparency alert, I’ve given the “this is not advice” disclaimer myself in the past, but I’m done with all that. Let’s live like crazy people and really go out on a limb here. Woohoo!

I talk a good game, but this isn’t some kind of nutty tax protester advice I’m handing out here. Instead, I’m telling you to find ways to love the IRS. The IRS is your friend. Keep saying that to yourself long enough to get past April 15th, mkay? Be dilligent, rely on good records, and all that. But that’s not the “wisdom” I need to impart today.

Here’s my earth-shattering tax advice. NEVER ROUND YOUR NUMBERS on deductions and related details. Use exact figures.

Do it the hard way and write in exact figures right down to the dollars and cents for your expenses  and deductions. Same goes for when you calculate them–why cheat yourself out of those extra cents? They add up. Five cents here, ten cents there…if you have over 100 receipts, 500, a thousand, well, you get the idea. No, it’s not a fortune. But add that to your SEP IRA, your mileage, your legitimate business expenses for meals and incidentals…and there’s also this other thing.

The headline of this post implies that not rounding your freelance deductions is a tax break you didn’t know you had. That’s true about getting a more exact figure to put in your Schedule C income tax forms, but it’s also possible, according to Business Week writer Karen E. Klein, who says putting in exact figures looks more like you’re using your actual records instead of guessing, which the IRS is inclined to take a dim view of.

Avoiding an audit sounds like one hell of a tax break to me.

This post is sponsored by Outright — Your Livelihood, Right Now. Getting your taxes right with free bookkeeping.