Ah tax season. Taxes can be confusing even under the best of circumstances, and who has those? Add in divorce, child tax credits, college loan interest, home credits and so on and even the most prepared start to get a little loopy. Case in point, I’m pretty sure I reworked my taxes at least five times last year, which wasn’t entirely my fault (see below).
In any case prepared or not tax season is here. Following are some tips…
Do bloggers even pay taxes? Yes if you earned an income that’s over $600 $400 (see comments – my bad) from blogging in 2009 it’s considered income. Income in the U.S. is taxable.
Am I a freelance writer or an employee? It depends on how someone is paying you. If you freelance for a company and they take monthly taxes out of your monthly pay then you’re an employee – even if you’re sitting at home working. If you work for a client and you get all the money you earn up front (i.e. in your paychecks) with zero taxes taken out you’re freelancing – even if you pay a visit or two to the client’s company home base. Where you work doesn’t define you as a freelance blogger or not, it’s how you’re paid that defines you. As a freelance blogger you may get both types of pay (with tax taken out and no taxes taken). An easy way to get ready to do your taxes is to place all your tax deducted W-2s into an employee pile and all your 1099s into a freelance pile.
Is Google income real income? In the eyes of the IRS, income from Google and other advertisers is still income and can be taxed. Read “Will I have to pay taxes on my AdSense earnings?” for more info.
Get ready early. Part of the reason I ended up redoing my taxes so much last year was because clients failed to send me my 1099s. Much like income, it would appear that tax forms for freelancers are also an oversight. Sigh. Technically 1099s (from US clients) are supposed to be sent out by January 31st, but there’s some February wriggle room in there that employers like to take advantage of. In any case you should contact your clients this month asap and give them a gentle reminder that you exist. In fact
And on that note… related to the above you may have to send 1099s to other people if you did indeed hire someone to help you out with your blog, and paid them over $600 during 2009. If this is you check out 1099s are a snap – meant for childcare workers, but a good resource none the less.
Be super careful about deductions. There’s a lot you can deduct, but you have to make sure it’s legit. For example, you can’t write your computer 100% off unless it’s completely and totally used for work. No writing grocery lists on it or letting the kids play games on it. Also, if you deduct you’ll need proof. Example; all those freelance magazines you buy for research (say for freelance queries) are deductible but you’ll need proof of purchase.
My “I am so not a tax pro disclaimer” – The above said, I’m not a tax pro. I’ve been doing my own freelance writing and blogging taxes for years so I have some experience but if you get hung up it’s best to one, check with an actual tax professional and two, visit the official IRS website. Lastly, I’ve rounded up some of the best blogging + tax related pieces I could find and you can browse them below…
- 7 Things That Every Blogger Should Know About Tax AND 46 Tax Deductions that Bloggers Often Overlook both by by Kelly Phillips Erb of Taxgirl – a blogging tax mama who seriously knows her stuff.
- 101 Tax deductions for bloggers and freelancers – this list has a few questionable items on it in my opinion, but is useful overall.
- Mrs. CPA Answers Your Questions Regarding Blogging and Taxes – plenty of useful info in this series of posts.
- Handling a Windfall Profit – ah, it sounds so nice but getting a bunch of sudden income can also screw you over in regards to taxes.
- Tax Time Tips for Freelancers – a great general know-how piece for writers and bloggers.
- What Every Freelance Writer Needs To Know About Taxes – tips from this community!
So, how excited are you about taxes this year 😉