The Freelance Writer’s Guide To Stabbing Oneself In The Eye With A Highlighter, A.K.A., “Taxes”

It’s that time of the year again! When I go to a lady and I vomit forth a bushel of faded crumpled receipts and then we talk for a half-hour or hour about my “work,” and then a week later she writes up this very nice helpful packet detailing exactly how much money the Tax Imp is going to steal from me while I sleep… the way cats thieve breath from infants. Good times.

I’ve had a few people now say, “Chuck, you should do a post about freelancers and taxes. It would be helpful!” to which I ask, “How would a post in which I weep and gnash my teeth and headbutt the computer monitor help anybody?” But, apparently, it will, so here goes.

Let me put forth this most critical of caveats: I am not an expert. I write stories about vampires. I write blog posts about unicorns and Bourbon. I am not to be trusted with critical financial information. You want help on the tax code, you go see Dan O’Shea, who is both a) a really great writer and b) a guy whose brain has been shattered by the intricacies of the American tax system. Anything you read here should be taken with a grain of rice big enough to hollow out and use as a luxury cruise liner. Capiche?

Do Not Pass Go, Do Not Collect Your $200: Get An Accountant

The tax code is a labyrinth, and at its heart lurks a terrible minotaur that will hold you down, teabag you, poke you in the eyes with his horns, then eat your bowels for brunch.

In much the same way that you would not arrange a trip up into the Himalayas without getting yourself a bad-ass Sherpa, you should not attempt to handle the trip into Tax Hell yourself. Taxes are not merely complex. They are downright Byzantine, and this is doubly true for the freelancer.

You may say, “But what about software? Like Bobo’s Tax App or the Tax-Bot 12000?” My opinion is: get an accountant. A human accountant. Because we cannot trust robots with our financial future. Robots secretly hate us for our ability to have tickle fights and eat ice cream, and so they will betray you. Seriously, though, a human being will tell you things, respond to questions, and explain stuff that software cannot.

That being said, not every accountant is born equal. (And ohh, they are born, not made. Anybody who is willing to do this is the product of nature, not nurture — like the birth of a hero willing to slay dread beasts.) I had one accountant who was a real dog-fucker, that guy. Didn’t tell me shit. Didn’t interact with me. Didn’t get me squared away with critical information. The next accountant was the polar opposite. Informative, interactive, actually friendly. Mileage varies. Get recommendations. Test ‘em out.

Also To Be Gotten: Booze, Booze, Boozy Booze

Listen, I’m not condoning the use of alcohol during the varying stages of tax prep and resolution, I’m just saying — *wink wink, mimes drinking from a big bottle of wine, whisky, or motor oil, then goes on to mime crying in the shower, shooting heroin in between toes, and praying to all the gods in all the heavens for a glimpse of forgiveness* Booze is your little tax buddy. Like that animated Paper Clip in Microsoft Office?

Except, y’know, less annoying.

Pay Your Shit Quarterly

Throughout the year, you must, you must, you must increase your bust pay your taxes quarterly. When I first started freelancing, nobody told me this. Not even that dickwad accountant I had. Turns out, yeah, you actually really need to. Otherwise, they penalize you. I always wondered, “Hey, why is it every year a big bare-chested dude in an executioner’s mask breaks down my door, steals my money, then pummels me in the kidneys with his giant hamhock hands? Did I order this over the Internet? Damn you, Amazon Prime!” But, no, no, it’s because I wasn’t paying quarterly.

If you don’t want to pay more than you already do, pay quarterly. An accountant can get you set up with estimated quarterly taxes. The accountant is a mighty wizard who can read the languages of madmen.

Sweet Deductions Born From Between An Angel’s Thighs

*chorus of singing Cherubim*

Provided you’re not spending more than you make and shooting up a signal flare for the IRS to see, you have at your luxury the ability to deduct lots of wonderful things as a freelance writer. Take a meeting in a coffee shop? Buy books for research? Blog hosting fees? Travel to cons? Lunch with other writers? Magazine subscriptions? Office supplies? Electronics? Porn? Okay, maybe not porn. But if a purchase is for your business, ta-da, deduction. I have a room in my house that is my office, and any resources that go toward maintaining this space (including oil, electricity, etc) are figured into the equation.

All this only works if you save your receipts.

Invest, too, in highlighters. And accordion folders. And small foreign children to put it all together (in fact, you can deduct what you pay them!).

It really is critical if you keep some kind of organization. Like, what I do is I shove receipts in various pockets, drawers, wallets, cubbyholes and orifices, and then when tax time comes, I run around like Mike the Headless Chicken gathering up all my lost and forgotten receipts. So. Yeah. … On second thought, maybe use a file drawer. (To be fair, I have a file drawer set up for this purpose thanks to my wife. But halfway through the year I sort of… usually forget about it? Ennhh. Oops.)

Are You Your Own Corporation?

Some freelancers will tell you that they performed the grim magical mechanics (re: paperwork) and have become their own corporation and that this helps them come tax time. This may be entirely accurate, and they can (and should!) sound off below on the value of doing so. I am not yet that guy, as my accountant has advised me that it wouldn’t be all that beneficial for me at this time. I am not yet Chuck Wendig Enterprises, Inc (Terribleminds Division). I do not have my own corporate cyberpunk army of dudes in suits and sunglasses with powerful ocular implants and laser fingers. But I will. You just watch! Pyoo! Pyoo!

What I’m Saying Is, Prepare To Pay Out The Crap Can

Everybody pays a lot of taxes, but freelancers also don’t put in for things like Social Security or, I dunno, paying for your state senator’s anal bleaching fees or whatever. So, freelancers kick in a little extra cream. It’s not actually more than other people pay, I don’t think, but it feels like it, and so we often emerge from tax season wondering exactly who bent us over a trashcan and took us at both ends with a corncob.

Sound Off

I know a number of freelancers — writers, artists, knights of the realm, hobo warriors — orbit in the space around this blog, so feel free to descend from the rheumy nebula and sound off on your tax strategies. Do you use software, or an accountant? Are you the mythical “S-Corp?” What do you deduct that others do not? What booze do you drink? Where are your pants? Have you found a way to deduct pantslessness?

18 comments

  • I’ve only been freelancing for a year and have not yet earned more than the tax-free threshold (in Australia, no idea if you have this in the US). I earned less than $5000 or whatever so didn’t have to pay tax. This is not a good thing. Less than $5000. Sob.

  • I am too honest / fearful for my own good, and so declare my freelancing income even though it’s a gnat upon the arse of my day-job. I have learned to smile and take my 300 quid ass-reaming every January like a man. Deductions are fun, though.

  • “My opinion is: get an accountant. A human accountant. Because we cannot trust robots with our financial future. Robots secretly hate us for our ability to have tickle fights and eat ice cream, and so they will betray you. “

    It’s paragraphs like this that were the reason I wanted to hear you write about taxes. You can take a truly miserable and mundane subject and make it … special. Yes. Special. That’s the word.

    I have had an accountant for a few years now because the Schedule-C/1099/deductions do-si-do is utterly beyond my ability to maneuver.

    A fellow freelancer, when I mentioned going LLC this year, told me to invest in a lawyer that will, for a small yearly fee, handle the filing for that and answer any legal questions I might have. She’s been doing that and is super happy with it. A lawyer/accountant backup team is pretty much a freelancer’s safety blanket.

    I also have the Epic-File-Folder-of-Receipts. My accountant doesn’t necessarily know which categories certain expenses might fall into (“What’s a CS4?”), so I sort them out and tally them. Otherwise, he always manages to let me know where I’m at, what I need to do better, what I’m doing right, and remind me of deductions I’ve forgotten to take into account. Which is awesome.

    I was always frustrated that my fancypants Bachelors in Fine Arts degree didn’t have a single class – not even a one-day seminar – on “business basics for artists”. I think it’s a huge shortfall for my college (a pretty big private arts college, too) to not have thought this would be important for kids to hear about. I had to pick it up as I went along, sometimes learning the VERY hard way. Is this the usual? Still?

    i’m wondering how many people who went to school for their chosen career they now freelance in – creative writing, illustration, etc – had any kind of sufficient education in the whole “business / taxes / contracts” realm of freelancer shenanigans.

  • I had my taxes done by my lovely and talented accountant (yes, tongue bathing my accountant is paramount to the process) this past weekend. It was the first time I’d had them done as a freelance writer. I’m thrilled to say I did everything right, and my beloved and nattily-dressed accountant managed to get me a sizable refund. Woohoo!

    My strategies… hmm, well, I’m incredibly anal compulsive, so I keep receipts that are carefully labeled, and all expenses and income are entered in an Excel sheet (properly coded, of course). And I heed my accountant’s advice: claim everything possible. Dialogue research at a Panera, spending time on vacation for research, etc, and document the hell out of everything.

    This one was new to me, though: apparently, charitable donations of a size that gets your name printed publicly, either online or in print, can be counted as advertising (which is more advantageous than counting as a charitable donation in most cases). Who knew?

  • As I eye up the prospect of freelancing, even just a little bit, these tips have floated in my direction. I’m glad to have them all in one place.

    Now to find an appropriate cubby hole to crumple these tips into right next to the receipt for my new computer innards and that fifth of rum…

  • Here’s the other big question. If you are a freelancer, does your spouse have a “real” — that is, taxes withheld – job? Because, if yes, and if you file jointly, you can avoid the whole nightmare of quarterly filings by having enough withheld from the spouse’s paycheck to cover your total, familial tax debt (or at least 90% of the current year tax debt or 100% of the previous year tax debt). Them’s the safe-harbor threshholds. Quarterly filing is the IRS’s way of ensuring you pay, but as long you pay enough through withholding to cross the above-listed threshholds, then you’re good.

    Wendig, you bastard, you see what you got me doing? I have to write about this shit on the day job, and now you got me doing it during fun-fun time. I was gonna maybe highlight a couple other things, like the ever-expanding Section179 deduction that might allow you to write off that steam-punk, unicorn-fart-powered spanking machine van of yours, but no. I’m stopping. I’m stopping right now.

  • I incorporated by my business as an S-corp 11 years ago. The paperwork’s a pain, but it helps keep me on track for taxes by taking regular deductions from the paychecks my corporation pays me. The best part is that any dividends I take over and above my salary — which must be appropriate to my industry — aren’t subject to Social Security and Medicare (FICA) taxes, which saves me 15.3% on those dollars.

    Freelancers do get double-dinged on those FICA taxes. When you’re salaried, your employer matches your payments for those bits, but when you’re on your own — or incorporated — you get to pay both halves just for the privilege of working for yourself. That’s an extra 7.65%, for those keeping score.

    I used an accountant for years for this stuff, but these days I’m handling in on my own with tax preparation software. That’s only because I paid enough attention (and dollars) to know what I’m doing now though. I recommend going with an accountant until you’re familiar enough with it all to handle it yourself.

  • I helped the hubby start an LLC in 2007 and almost shot myself in the face when it came to tax time. I have learned since then to choose booze over gun so no worries. To stay somewhat sane we use quickbooks and an accountant or would otherwise die.
    “Hey, why is it every year a big bare-chested dude in an executioner’s mask breaks down my door, steals my money, then pummels me in the kidneys with his giant hamhock hands?” — I know this man and hate him. May he choke and die. Thanks!

  • As a person who has accountant friends (you didn’t know accountants had friends, did you?), I notice that you missed the most important piece of information.

    Don’t wait until the last day!

    If you show up on your accountant’s doorstep on the last day before filing and barf out a garbage can full of receipts on his desk, he will, without hestation or regret, sling your monkeyass out the door and back into the slimy gutter you came from.

  • I’m not a freelance writer (yet), but I have income that’s reported the same way from private piano and voice lessons. I’m pretty good with taxes, but I wasn’t sure how to report my private lesson income the first time after opening my studio. I paid an accountant to do it the first year, and then in subsequent years I looked back to remember how to do it.

    That said, my income wasn’t nearly as complex as Chuck’s. But, I can usually surf tax preparation with minimum of blood loss, as I get to skip the corncob torture.

  • In Real Life, I work for a multi-state retail corporation doing stuff with numbers. (I’m in charge of all the money. Sort of.) You want to know about sales tax or payroll tax, I’m all over it. If I ever get to the point where I’m making so much money as a writer that I need to incorporate… hang on, I’m laughing so hard right now I can’t type… okay, I’m better… the monthly/quarterly/annual tax reporting will be a piece of cake.

    But INCOME TAX? Nonono. I don’t do that. I don’t want to do that. In fact, I refuse to do that. Don’t anyone tell my CPA, but I’d pay triple her current rate if she asked. I try to keep her happy this time of year by sending her email that makes her laugh. If you’re worth your salt as a writer, you will hone this essential skill. You don’t believe me? Obviously, you’ve never received email from me.

    Really, hire someone. It will save you money in the long run and give you peace of mind. Okay fine, we’re writers, there’s no such thing as peace of mind. Damnit. It will give you one less thing to obsess over. Over which to obsess.

  • My dad taught me the basics of doing taxes when I started working full time. He said if you start when it’s simple (and really? when you get out of college & are making barely minimum wage, the 1040-EZ is about as simple as it gets), you can build up to the more complicated stuff. And he was right … mostly.

    Then I got married, and my honeybunny works for the IRS. And we did our joint taxes, and he helped his mom & grandmother with THEIR taxes.

    And then the day came that his grandmother’s taxes became so complicated that he had to order four — count them FOUR — separate IRS publications dealing with railroad widow benefits, schoolteacher benefit, and all other manner of crap, that he threw in the towel and went to his mom’s accountant & dumped the whole shebang in the accountant’s lap.

    And then his mom passed away, and we had estate stuff plus our personal stuff plus his grandmother’s tax stuff, and just as we emerged from the complexity of estate stuff, his grandmother passed away and we had to do it all over again.

    The accountant has become a permanent fixture in our lives, even though we are back to relatively simple tax stuff. Because really, the accountant does a damn good job at it. And I am glad, because when I start my freelance stuff, we’re gonna need an accountant and we already have one.

    Yes. Even IRS employees … GOOD IRS employees who are experts in the byzantine world of taxes throw in the towel and hire accountants. Sometimes because they are more expert than the employee in obscure reporting rules. Sometimes because when your job is taxes, it’s worth the money to let somebody else do YOUR taxes instead of spending weeks of your own, off time, doing it your self.

    We loves us our accountant.

  • Be aware that states with sales taxes can catch businesses for the sales tax that isn’t paid on items ordered (online) from out of state. Everyone is technically supposed to submit this tax (Use Tax) but there’s no way for the government to track the missing money. I suspect they go after businesses because there’s a paper trail of expenses and receipts. I got very lucky because, after conducting business in Pennsylvania for years, and spending a lot online, I got the notice. Fortunately, I had since moved to Oregon (a state without sales tax), and PA only asked for records dating back to a month, or two, after my move. I likely owed upwards of $1,000 if they had gone back all the way.

  • This will be my first year freelancing and I’m so pissed off about being penalized for being cool that it is my great pleasure to deduct every speck of flying poo (with receipts) that comes out of my rear end and falls on my writing chair, because they spark a fire in my butt to work. And I’m doing it in tax prep software so that I can control exactly how many specs are accounted for. I have to say, I don’t trust an accountant to tell me everything. Whereas you are 100% correct that robots hate us for having opposable thumbs, humans can be just as flighty.

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