What I wish I knew - second year

[Kyung]

Hey,

It's been a while.  Don't know if anyone is listening or reading.  But here's a thought.  Instead of my annual rant and rave about the tax man coming, how about I tell you how I keep track of stuff so that when I have to go into the tax man (or THE MAN) as I'll be calling him from here on out (as in  don't let the man get you down).  Anyhoo, I digress.

So you've got your Depobook.  You have your shoebox full of receipts.  You've got your mileage written down.  You've got a list of expenses and you know how much you made (kind of)  What?  You don't keep track of your checks?  Why!!!!  (Long rant  here).

Let's start at page one.  Keep track of your mileage.  It's a writeoff.  Ideally, we should run out at midnight on New Year's Eve and write down the miles on your odometer.  If you do that every year and subtract Jan 1, 2012 from Jan 1, 2013, then you will have your mileage for the year.  I mean, really, what else are you doing on New Year's Eve?  Ok. Ok.  After you kiss your SO, then go out.

That was step one.  Step two is a little bit more complicated.  Keep track of your mileage.  Every time you drive to a job, write down your mileage.  I use GoogleMaps.  The IRS will accept it.   I then move the mileage to my spreadsheet and have nifty formulas to built in that does the math for me.  Here's the thing.  You can only write off business mileage.  Driving to and from the store does not count.  You take the job mileage number and subtract from total miles driven, and voila, you have the number of business miles driven for the year.  Whoo-hoo.  The IRS will not believe that you use you car a 100% for business.

Keep track of maintenance on your car, insurance, and DMV fees, parking fees (if not reimbursed by agency.)

Next, business expenses - paper, toner,  postage, CE, conventionsn, printer cartridges, oil for your shredder, Depo Books, hanging file folders

LIcenses - yearly software support, NCRA membership, state license, DRA membership (state association), amount you paid to the person doing your taxes

Equipment - new writer, new software, new digital recorder, new head phones, new car, whatever - if you can depreciate it over several years and it's related to your work, write it down, laptops, maintenance on said laptops

Scopists - I 1099 anyone who I send more than $600 to in a year.

Gifts - only $25/person.

Quarterly taxes - I highly recommend paying quarterly.  Just pay an estimated amount.   It should be as much, at least, as the amount you paid last year.  They will ding you if you underestimate too much.  And it also hepls in April so you will get hit with less of a tax bill.

Home office expenses - must have dedicated home space, not a corner of the kitchen table - telephone, mortgage/property tax, Internet, utilities.

Now, I choose to keep track of all this in a Excel spreadsheet.  The Excel spreadsheet is set up with the first tab being all expenses and yearly income.  Then it has links to subsequent tabs which is each individual agency I work for and monthly tabs.

This is where it gets really  complicated, might need some basic Excel spreadsheet skills.

So each agency has a tab wherein I write the job name, job number, date, page rate, expedite, parking, mileage, etc.  Each agency page has multiple months.

Then I have tabs for each month, with links to each agency so I know how much I made on a monthy basis for that agency.

So on the agency tabs I can tell how much I made year-to-date for the agency.  And the monthly tabs, I can tell how much I made for the month.

Then the monthly tabs populate up into my first page, which is the yearly income.  So the first page of my spreadsheet has how much I've made total for the year along with expenses for the year.  I also have a nifty graph so I can see how much I'm making monthly in a visual way ('cause that's just how I am).

So I print that out and take that to the accountant.    They really don't want your little receipts in your shoebox.  Save those for the MAN when you're pulled in for your audit.  The spreadsheet is no good without backup.  Your bank statements, your Depobook, your shoebox full of receipts, and your 1099s are your backup.

Hope this make sense.  It does get a little complicated.  

P.S. for the super anal, I also have spreadsheet that takes the yearly info so I can see how much I'm making year over year in terms of annual income, page rates, and pages produced.  I find it interesting, but that's just me.

If I missed any writeoffs, please feel free to share.

What do you take into the accountant?

[Kyung]

Hi, Rosie,

I use Filetaxes.com to file  my 1099.  It's relatively cheap and really easy to use.

Remember you only have to file a 1099 if it's $600 or more to each scopist or proofer.  

[LEONORA L WALKER]

I really hate this time of year.  I get a little jealous of my friends who actually get money back.  I don't know how they do it.   

[Martha R]

You all are pretty thorough.   I have never been audited, so I feel lucky.  But I pay a lot of taxes....

Quicken is great.  I need to update mine because my old one is so outdated it doesn't work on Windows 7.   I am using B of A online portfolio this year (it's free but not that comprehensive).  I must admit I don't keep mileage anymore.  I just estimate it.   

I am thinking of getting a solo 401(k) for 2013 because you can put more money into it (so I'm told) than a SEP IRA.  At my age I need to sock a lot away as retirement approaches.

[Kelli Combs (admin)]

I make my husband take care of the taxes and I don't bother with any of it.  I do hand him over the receipts for gas, parking (in San Fran is expensive) and scoping/proofing invoices, equipment I've bought for the year, money I've invested (SEP IRA is a write-off).  I'm writing off my treadmill desk I bought in 2012, which is pretty cool.  He gets everything together and gives it to the tax guy.  I've been audited five times already, so I try to be pretty diligent about keeping receipts for everything.

[Judy]

I use QuickBooks.  Everything is in one program and it spits out reports like you wouldn't believe.  Need a P&L? Done.  It even has a tab so you can enter your mileage.  And if you're disciplined enough to use the same coding for expenses/receipts that, say, TurboTax has, you can just tell TurboTax to get the figures from the program and it'll plug them in automatically.