Freelancer Taxed Income Question (HELP!!!)

You aren't telling me anything I don't know....haha.....I've already given my accountant a call, but she isn't home yet.

 

As someone mentioned, you can offset the income with deductions. If you drove to the events you covered and that was unreimbursed, you can offset the income by the mileage driven (48.5 cents, I think, is the federal rate per mile). In fact, if a paper reimburses you at fewer cents per mile, you can deduct the difference.

 

Yes...I was not paid mileage while stringing....But, I don't have the mileage info...

 

if you have records from the gigs you covered, you need to put together things like mileage and meals from when you are on assignment. that can decrease the amount of taxes you have to pay. but you are best off consulting an accountant to see exactly what deductions for which you are entitled.
An accountant might be a little bit expensive, but it will be helpful if the IRS does send you a letter wanting an explanation. I've had a few inquiries in my time and my accountant has written back explaining our position and the IRS eventually agreed with us.
Never, ever mess with the IRS.

 

If you've already done your return, you'll need to file an amended one with this income added.
And I don't mean this as an insult, but I can't believe you thought freelance earnings were tax-free.
The whole world would freelance if that were the case.
If your accountant told you that, you need to find another one and now.

 

JD. I will reiterate what the others have said. You not only have to pay all your income taxes, but you also have to pay the portion of your Social Security taxes that an employer normally pays. That will total about 15 percent of the total freelance income.

Here is one way to lower your tax bill a little and start saving for retirement, which is absolutely necessary no matter how old you are. Go to your bank, or ask your brokerage, to open a SEP IRA (Simplified Employee Pension) account. Your tax accountant or a software program such as TurboTax can figure out the maximum you will be able to deposit into the SEP IRA. You then can deduct that amount from your total income, thus lowering your bill for federal and state income taxes, as well as the Social Security tax (which is referred to as "self-employment tax" on Schedule C.

By the way, the SEP IRA would be a good move for anyone who has substantial freelance income, even if they are employed by a company and have a 401-K or an IRA.

If you expect to have significant freelance income in 2008, you should pay quarterly estimates, so you won't have this problem next winter.

 

Don't forget telephone, cable TV, equipment (tape record? notepads?), possibly even a home office deduction, publications (newpaper, magazines). Depending on the nature of the stories you wrote, all of these are possible. You might be able to balance out a lot of that $3500.

 

If you're going to take deductions, you'd better have them well documented. The fact that you didn't do that in 2007 may work against claiming deductions. You may just have to bite the bullet and learn from the experience, unless you can recall exact amounts on your meals while on assignments.

If you try to take a home office deduction, better be prepared to prove that one, too. Those are a big red flag with the IRS because people abuse the hell out of it. The same with stuff like cable, which has a significant real world use apart from work.

Basic advice is don't try to get cute with them. They've heard every story, and they have all the leverage. Once they start piling on interest and penalties, you'll want to cry. (That advice isn't for you as much as it is for the people who think they're going to write off a two-week vacation by writing a half-assed travel article for the paper about how much fun Hawaii is).

 

If all you made last year was the money from stringing, you wouldn't pay anything in taxes except the self-employment tax. That's because it is under the standard deduction.

If it's over your head, I suggest have someone do your taxes.

 

Speaking of freelance income, do papers usually send you a 1099 if you did less than $400 worth of stringing for them?

I did two or three stories for a pair of papers last year. I earned about $250 from one and $100 from the other. I haven't received any tax information from either paper yet, and I'd like to go ahead and file. Are tax documents forthcoming from these papers, or am I waiting on something that's not coming?

 

Yeah I hate this.

Nothing is worse than having to give money back (sometimes at the end of the year) or deal with the extra filing. This year I freelanced one story. $75. Damn. I wish they could have paid me under the table, it would have saved me a bunch of time.

 

An accountant friend of mine says there are ways, as a freelancer to write off things. Gas mileage, your car, house if you work from home, supplies, computer (obviously, and then internet usage for it ) phone, phone bill, etc. So if you made a ton stringing, it may be worth 100 bucks to go see a professional. He or she may be able to work it out legally, and have you paying much less.

The same guy has told me stories that you can basically be a freelancer working untaxed if it is done the right way.

Thats a big deal if you make 25 k... because it would really be like someone who makes closer to 30k and brings home 25.

Again, Im no math stud, or tax guy.... but this is just what i heard, so ask around.