Crush Your Taxes Like A Boss!
I write this post after what may have been the most cluster-fucky tax preparation of my life! Usually I begin prepping in January–I take my time getting organized, printing out statements, sorting through receipts, making lists, filling in my spreadsheet, and realllllly just making sure I didn’t miss anything. This year…well, let’s just say I almost got a divorce. Paul had scheduled a meeting with our accountant weeks in advance (to be fair, business taxes are due earlier than personal income taxes) and so I really had no excuse. But of course my excuse to him was something along the lines of, “sorry I just had a baby and still work and have to maintain a household, and a social life, and yeah…my taxes aren’t done!” I think he was more just shocked because I’m usually just SO on top of it. What can I say, sometimes I just procrastinate, Richard. However, the moral of the story is this: if you go about doing your taxes in the organized fashion I usually do them in, it will make the process a lot smoother and stress free-ish (that is, until you see how much $$ you owe…).
Okay, so before I jump into the tips and tricks (kidding, no tricks when it comes to your taxes 😉 ), I should clarify that these are more applicable for people who operate as an independent contractor, or 1099, as they say in formal-adult-world. I would hope you know if you fall into this category, if not, it means you run your own business. Aka not a W2 employee. If you do not currently collect a traditional “paycheck” from your employer, then listen up, these tips might just save you some $$.
Tips To Make Tax Season Less Miserable:
-Save Your Receipts. Rule #1 of taxes as an independent contractor is SAVE ALL YOUR RECEIPTS. And I mean ALL of them. I have a nice little box I picked up from Home Goods that I plop all of my physical receipts into. It’s a pain in my ass holding onto them but in the event you get audited you’ll be happy you kept them. At the end of the year I clip them all together and move them into a bigger box to make room for the new year’s receipts. Get into the habit of doing this.
-Print Your Statements. This is a little wasteful, but I feel like I hardly print anything during the year except my bank and credit card statements for tax purposes. I’m trying to justify the amount of paper I waste on this, but honestly, I’ll go blind staring at the computer for that many hours.
-Highlight. Get yourself a brand new highlighter and go to town. Highlight all purchases that categorize as a write-off and put a little category note next to each one. For example: 76 Station – $54.30 (Gas), Toca Madera – $76.44 (Dinner with brand), Jet Blue – $680.17 (Flight). If you need help figuring out what categorizes as a write-off, here is a little cheat sheet you can refer to.
-Make a Spreadsheet. I do this so I can itemize all of my purchases / write-offs and then break it down by month. My list of categories is pretty extensive but I rather include everything and then have my accountant decide what counts and what doesn’t. In my spreadsheet I also have a 2nd tab that breaks down the Totals by Category, Totals by Month, and Grand Total for the Year (ouch). I got myself into the habit of creating this and my accountant has confirmed that it is very helpful and makes the process of doing my taxes a lot easier and error-free.
-Gather Tax Documents. You will get them from your bank and loans based on the interest you’ve paid and these count as write-offs.
-Collect Your 1099s. Clients that pay you over $600 are required to issue you a 1099 so make sure you’ve submitted your W9 to them. This is how you claim your income.
-Issue 1099s. If you have paid anyone over $600 (for me: photographers, graphic designers, etc.) then make sure you issue them 1099s in time.
-Give Yourself Plenty of Time. Not gonna lie, this process is a serious bitch. So don’t snooze on this. Start early, and if you’re super ambitious you can even log your expenses into the spreadsheet as you go. I personally prefer to do it all at once at the end to make sure I don’t double log or make any mistakes. The point it, carve out a good 2 days-worth of time to do this.
Do you guys have any tips for making tax season less miserable? Please share!