tax-time questions for freelancers

Hey, I was wondering if anybody could give me help on some tax-related issues.

I filed my federal taxes yesterday and it turns out I owe some money, which wasn't a huge surprise since I've done quite a bit of freelance writing since I got laid off from my paper in October and also did some before then. Obviously, taxes are withheld on freelance paychecks, so the government just hits you at tax time.

Anyways, I thought I could get out of some or all of what I owe by writing off mileage, food expenses, hotel stays, or anything I paid for while freelancing that I was not compensated for and related to business purposes. Well, I tried to do this by itemizing, but to get an itemized deduction you must come up with expenses that total more than what your standard deduction is. In my case, they did not, so I can't itemize my deductions. Usually, you itemize if you own a home, because then you can list your property taxes and mortgage interest, but I'm a renter, so I can't do that.

Therefore, I looked into something called a Schedule C, which is how you can file deductions without itemizing and still using your standard deduction. Schedule C is business expenses, but you must own a business to file deductions under Schedule C. Being a freelancer, you can do this by reporting that you are self-employed. You get hit with a self-employment tax, but at least you can write off your business expenses.

But here's where ANOTHER twist comes in for me. I've been collecting unemployment since October, and you have to pay taxes on that right now, just like freelancing. Unemployment does not regard me as self-employed. When I report freelance work, it's regarded as independent contracting. If I was regarded as self-employed, that would change the structure of my unemployment benefits. So you can see the problem. I don't want to report myself as self-employed for tax purposes then have the unemployment agency jump up my ass for calling myself self-employed when they've never regarded me as such.

I know this is a long and perhaps confusing inquiry and I should probably speak with a tax lawyer, but I figured there might be some freelancers on here who were at one point or currently freelancing while collecting unemployment and might be able to give me some advice on how to deal with this issue.

Seems pretty shitty that I can't write off any of the business expenses I incurred while freelancing.

 

I'd get a tax lawyer, but I'd think that independent contracting isn't employment in the strict, full-time sense. If you get that cleared up, next year (or this year if it's a benefit to you to refile) don't forget two more forms: 4562 for depreciating equipment (such as your laptop, camera, etc). and one in the 8000s for business use of your home. It's complicated but worthwhile once you understand the fine print.

Also, when freelancing, pay the quarterly estimated tax, and then you're not socked all at once on April 15.

 

I just paid my taxes. I did a ton of freelancing and actually got a return by properly indicating all of my expenses. So not only was the tax withheld in the beginning, I don't really have to pay any at all - in essence.

But, I would advise against the business use of your home. It is a pretty sure fire way to get audited. It is a nice deduction but not worth the intricacies it takes to fill it out or the chance you get audited.

Definitely hit up the mileage, hotel stays, flights, parking, airport parking, and food. I did it by being "self employed," its worth the self employment tax levied.

 

This is a good question and unfortunately I don't have anything to offer in the form of an answer other than to say it was definitely worth asking.

The problem isn't in whether it's worth the self-employment tax, it's whether you're going to get screwed up with unemployment if you're considered self-employed for tax purposes but an independent contractor with unemployment. It is a major pain in the neck, really, and at least where I am, I'm losing money because of a little freelance I have -- it's costing me money with unemployment even though I don't make that much.

Very frustrating overall really.

 

If you had been trying to make a living as a freelancer and being "self-employed," if you suddenly stopped, are you entitled to unemployment compensation?