Yay for taxes! Fun, right? Well, not super fun, but I do appreciate things like the library and 911. So, I’ll do the tax thing.
I remember the days when I could do my taxes in about 20 minutes flat. Get the W-2, fill out the EZ form and go.
But now, self-employment makes things a tad more complicated. I still wouldn’t trade it.
Disclaimer: I’m not an accountant or a lawyer, this comes from my personal experience only. Please seek the help of qualified professionals to help you with your personal situation.
Now that I’ve been at it a few years, here are my tips.
1. Count all your income
Blogging income is not just the cash you make. It includes items you received for reviews, Swagbucks, trips, conference sponsorships, conference swag, free stuff (appliances, clothes, household products) and more. Check out Sarah’s post for a detailed breakdown.
2. Report all your income even if you don’t get the forms
I get a lot of 1099-Misc forms during tax time. They show how much non-employee income I received during the year. They only need to be filed if the amount was over $600. But even if I don’t get one (because someone forgot or because my income wasn’t $600 from that individual or company) I still have to report it as income. This is why I keep a simple ledger and record all income that rolls in.
3. Don’t do the heavy lifting yourself
While I don’t love doing my own taxes, I don’t hate it either. And our tax situation isn’t so complicated that it warrants hiring someone to do it for us (plus, I’m cheap). But, doing taxes manually is not so much fun. For several years I’ve used Turbo Tax (the online version). I highly recommend it.
4. Estimate right
As a self-employed blogger or freelancer, you may have to pay quarterly estimated taxes. That is, 4 times a year you have to send in a chunk ‘o change to the IRS since you don’t have an employer withholding taxes for you. This year I underestimated which means I’m going to have to shell out extra cash when I file my return. Next year I’m just going to sock away a flat 20% of what I bring in each month.
5. Don’t forget to issue the right forms
Do you pay affiliates for an ebook, a product or a service? If so, you might have to issue 1099-Misc (or other forms). Technically these have to be sent by January 31, so if you haven’t done it, get on it! (Turbo Tax makes this super easy.)
6. Deduct what you can
7. It’s not too early to prepare for next year
The first few times you wade through tax season as a blogger, no doubt you’ll realize how many pieces there are to the puzzle. And if you’re like me, they’re scattered all over the place. My recommendation is, as you walk through the steps in Turbo Tax (or however you’re doing it), take notes. Note categories, expenses, income sources, etc. Use those notes to create a ledger (I use Google Drive) to get organized for the next tax season.
8. Helpful resource
Your Blogging Business: Tax Talk & Tips from a Bookkeeper Turned Blogger* is very helpful ebook with practical tips and information and discusses the issue in great detail. Recommended.
Got any more tips?
*There are affiliate links in this post.