Freelancers

I'm gradually picking up more and more freelance projects and was just wondering how you big-time or full-time freelancers here on SportsJournalists.com go about staying organized with all of that. Keeping track of what's due when, who's paid you and who needs a broken thumb or two, tax records, etcetera etcetera. What is your home office setup like, if you have one?

 

If you know how to organize and pay your bills, it's kind of the same deal.

I'd also recommend keeping a record of every invoice and check stub because tax time is pure bliss. 1099 heaven! (Be forewarned: Not every company will send you a 1099-MISC if they paid you, say, less than 500 for the year.) There's a good chance you will have to pay estimated taxes on the income every quarter, too.

 

unless required by tax laws, why wouldn't you just put 25% from every check into some kind of account dedicated to the irs? sure, the interest you'd make might me minimal but it's more than 0%. why give the govt. your money any sooner than you have to?

 

because there is a tax penalty if you don't contribute at least, and I believe it is, 90 percent of your estimated total tax bill by Jan. 15. they penalize by the quarter, too.

 

well that sucks

 

The self-employment tax rate is 15.3%, double the FICA rate because there's no employer match.

Self-employed workers do get a tax break, however. Half of their self-employment tax is deducted in computing adjusted gross income.

I suggest investing $20 for a tax program such as Turbotax that walks an individual through the return. It's much cheaper and easier than hiring a professional preparer.

 

The folks I know trying to make a go of it by freelancing start out with the intention to divert 30 percent of it to quarterly tax payments or next year's tax bill. But then silly distractions like groceries, mortgage, car notes, heating and electric bills crop up, and that plan gets derailed. So they have to scramble and dig deep on April 15.

 

What exactly do you get hit with non-payment penalties for? "Not paying...." Yeah I caught that. But what, exactly, and when? Just not reporting all of your income? Do you have to pay taxes more than once a year? What do you guys mean by setting up a quarterly plan?

 

My wife is a freelancer. The last time we tried TurboTax it told us we owed Uncle Sam more than $3000. We went to a tax pro with experience doing taxes for journalists and ended up getting a refund.

If you have someone who knows what he or she is doing, I think the paid preparer is the way to go.