How well do you track your expenses?
By Ilise Benun
Here are a few things not to forget this tax season:
Don’t Cut Yourself Short: Just because you work in a t-shirt at the cafe or your pjs in your apartment doesn’t mean we can’t treat you like a business when it comes to your taxes. And that’s exactly what we want to do. Why? If you’re not a business, you’re a hobby—and hobbies aren’t allowed to deduct losses. So if you’re thinking of not reporting your freelance career because you’re not “making enough” yet, just remember, that money you’re losing in this year can be offset against income from all other sources. Get the credit you deserve!
Be Aggressive On Research Expenses: Research can include anything that makes you better at what you do or inspires the work you create in some way. As creative professionals, hopefully your wheels are spinning already thinking of possibilities… Be aggressive about reporting these expenses, but be equally diligent about tracking the connection between each expense and your work.
Mixing Business and Pleasure: When traveling for work, it’s very common to include some time for fun. Just get to a firm number of work days vs. personal days and have something on paper (e.g. calendar) to back it up. Then add up all your travel costs for the trip (flight, ground transport, meals, etc) and multiply it by (work days / total days). Easy!
Your Bank Statement is NOT a Receipt: The IRS looks at bank statements as “secondary” evidence of a transaction. Why? A debit card swiped at the drug store will only have a total on it, and while you might have used it to grab batteries for your camera, there’s no way to prove that. So keep the paper—or use a system to digitize it for you so you can at least refer back if needed.
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