So you got your first freelance paycheck for that FOB piece in Woman’s Day. Awesome, right? Well, yes, but remember that the lump sum you were paid is hardly tax free. You will have to pay Uncle Sam back at some point and if you’re unprepared, it could hurt your wallet more than you think.
Filing taxes can be a confusing endeavor all by itself, but when you’re a freelance writer, you also have to contend with the self-employment tax, applicable tax forms and, of course, deduction tracking. Fortunately, Tax Day doesn’t have to be a nightmare. In our latest Journalism Advice column, we spoke to several tax experts about the dos and dont’s of filing as a freelancer. Here’s one tip on figuring out how much you’ll owe at the end of the year:
Because freelance income is so erratic, it can be difficult to calculate how much you’re going to owe. William Perez, tax practitioner and freelance writer, says that you can use Publication 505, available on the IRS website, to determine your taxes by hand. “However,” he says, “I prefer using tax software. After building a scenario for next year’s taxes in the software, I capture the data and tax calculations in a spreadsheet. Then I use the tax calculation to create a budget.”
For more tax advice, including whether to remain a sole proprietor or become an LLC, read: Tax Tips for Freelance Writers.
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