Tag Archives: IRS

freelance money

Not Freelance Tax Advice: Federal Income Tax Deadline Extensions

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Joe Wallace Turntabling Rare RecordsMany freelancers–including me–truly dread tax time. And many of us find ourselves needing to file an extension so we can eventually get our act together and get the paperwork submitted.

Since I am the head of the Chicago Chapter of the Freelance Tax Procrastinator’s Union Local 312, I thought it would be a very good idea to post something about how to file an extension on your Big Scary Federal Income Tax paperwork for 2012.

AND since I am NOT a tax professional, it seems best to simply quote the IRS chapter-and-verse on the subject rather than try to give you some kind of pithy words of wisdom.

Thus sayeth the Internal Revenue Service:

“If you are not able to file your federal individual income tax return by the due date, you may be able to get an automatic 6-month extension of time to file. To do so, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date for filing your calendar year return (usually April 15) or fiscal year return. This form is also available en español.”

See the IRS official site for more information, but it’s critical to note the caveat that you must apply BEFORE the due date (traditionally April 15 unless it falls on a weekend, in which case there may be a shift to the previous or following business day). Don’t delay if you need an extension–follow the links and fill out the paperwork as soon as you can.

Joe Wallace is a freelance writer, social medial manager, editor, roving DJ and vinyl collector. His vinyl blog is Turntabling.net and features a large gallery of truly awful record album covers. He has not yet filed his income tax extension paperwork, which means the clock is ticking….

editorial, lifestyle

Tax Time For Freelancers

Joe Wallace Freelance Social Media

by Joe Wallace

Are you ready for tax time? One very important set of numbers you should be crunching–or planning to crunch next year–is the work you have donated for charity. Have you done any freelance work for your favorite causes? If not, consider doing some this year in anticipation of next year’s tax season. In addition to supporting a worthy organization that could use your skills, you’ll be able (with the advice of your favorite tax prep expert) take the allowable deductions in the appropriate manner.

Update: I’ve just gotten back from my new CPA (my first ever!) who tells me you need to be able to show a financial investment–not just a time investment–in your charity work in order to take a deduction for such involvement.

For example, as a freelance editor I could donate my time, which is done for the satisfaction of a cause well-supported–the IRS won’t cut you a break for that. But if I SPEND money to support my cause, it’s closer to being deductible. What’s the difference between a simple donation and, say, offering to pay part of the costs associated with a charitable event? Your tax preparer knows the answers–be sure to ask!

Save yourself some tax pain and give something back at the same time–you’ll be glad you did. And yes, the reason why this is top-of-mind for me is that today was the day I got to deal with the tax man…

editorial, lifestyle

Quarterly Tax Tips From Outright.com

tax

From time to time someone offers Freelance-Zone some valuable content that we feel will be helpful to our readers. Kevin Reeth is the CEO at Outright.com, a free online bookkeeping system that helps small businesses keep track of tax info and related material. (Read what PC Magazine has to say about this company here, or just check the company out at their website where there is plenty of information about things such as the security of data and how to get started.)

Since quarterly tax time is approaching, we thought you could use the information Reeth sent over and are printing it for you here. Thank you to Outright.com and Mr. Reeth for the timely information!

(Please note that the facts, thoughts and ideas expressed below are that of Outright.com and not of Freelance-Zone. We are not tax professionals–we’re freelance writers!)

5 Opportunities to Turn Tax Time to Your Favor 

1. Get away with nothing.  If self-employed, you are free from estimated tax payments if what you owe, after subtracting exemptions, deductions, and credits is less than $1,000.

2. A safe harbor during the economic storm. If you choose to pay the same amount as your total tax bill last year, simply pay the same amount on June 15, 2009 as you did June 15, 2008 OR 90% of what you will owe this year.  You can feel confident in what you pay and send your check without further calculation and time spent concerning yourself with the details.

3. Pay it or stay it?  We have had a rocky few months with the stock market.  What are your thoughts on where it will go next?  The IRS doesn’t pay interest on the money you give them now for taxes due later.  Extend those tax expenses and put the money to work for you instead.  Remember! You still owe the money so don’t take risks with it; just consider the tradeoff between what you could earn on it in a safe investment.

4. Credit have you tied up?  The government penalty on underpaid estimated tax payments is down to 4%, the lowest rate we’ve seen in the last 10 years.  Paying down those credit cards, with rates as climbing into the twenties, will likely save you more than the penalty due from underpaid estimated tax payment.

5.  Organize for 2010.  Work with outright.com to keep track of your estimated tax payments; saving the details for next year’s taxes and freeing your time for your business. 

advice, resources

Negotiating Freelance Rates for 2009

freelance-writing-advice-3An interesting article at FreelanceWriting.com includes this quote:

“Many individuals who lack writing skills drive down rates, way below what professional writers can rightfully charge. If the true professionals do not keep up their prices, this will become an even bigger problem. Just because writers from other countries want to work for eight or nine American dollars per hour, this doesn’t mean you should.”

That by Brian Scott, who in the same article advises writers to list their rates on a website and collect a retainer up front. I disagree with both of these suggestions for two reasons. I never list my rates on my website–it prevents me from being flexible with small clients who work on limited budgets. Let’s say you find a non-profit you believe in and want to cut them a break–listing your rates up front could scare them away before they even get in touch. In theory, you’re also committed to those rates regardless of how labor-intensive the project winds up being. Continue reading Negotiating Freelance Rates for 2009 →

advice

Freelance Pay and Your 2009 Taxes

calendarMark your calendars, April 15, 2009 is fast approaching. Tax time is hell time for most freelancers, but here’s a little hint that will make tax season 2010 seem like a breeze. Grab your pens, kids, this one’s a real brain tickler.

When you see how much you owe in taxes for 2008, make a mental note. That’s the minimum you should consider spending on your business in legitimate, legal expenses for 2009.

You’re going to earn more freelance money in 2009 than you did in 2008 unless you hit bad luck, give up and go back to your day job or just quit trying. Plan on spending more money on your business this year–what’s the point in giving it over to the government when you can take legit, IRS-approved deductions for upgrading your office, advertising your business or hiring casual labor to take some of the donkey work off your plate?

Why did I choose a 2005 calendar to illustrate this blog post? Because I wound up owing the IRS for my earnings in 2005, and if I had just planned ahead and made some crucial investments in my writing business I could have paid far less while giving my work a much-needed boost with a high-speed Internet connection, a GOOD cell phone instead of the crappy one I had put up with for so long, and several other upgrades.

Be smart in 09. Do the math and plan ahead. Make those purchases and promote your business. You should pay all the taxes you owe–but make damn sure you don’t owe as much as you could when there are legit deductions to be had.