Are your taxes submitted?
It’s April 5th. You officially have 10 days left to get your taxes submitted.
However – fear not! You are not alone in this last minute rush. With many creatives, designers, freelancers, etc. it can be difficult to push the submit button on our taxes especially if we owe money rather than have a return coming our way.
This year our taxes were handled through TurboTax and while we crossed our T’s and dotted our I’s (do people even say that anymore) there was a lot to discover with new law changes and deductibles.
So here are some things to make sure you think about when gathering your tax documents together and making sure you submit on time.
Did you travel for your job this year? If so what expenses were associated with it? Make sure you have an accurate recording of your expenses from mileage to tolls, and other fees.
When traveling did you work out of your home state for more than 30 days of the year? If so you would also need to pay another state's income taxes for this filing year.
Did you go to any conferences or conventions where you paid for the expenses out of pocket? You may be able to write off travel, ticket and other expenses during the event. This type of event is seen as a way to enhance your business as well as your business outreach/client opportunities.
Do you work remotely? This is becoming a larger and larger part of the creative sector. If yes, you can write off part of any of the square footage you use as your office, and any ways you use to connect to the job like part of your internet bill and part of your cell phone bill. However, be mindful of your actual use. Your “office space” must be dedicated office space and used for that and that alone in your house.
Did you have to buy any new equipment/software, business cards, font packs, licenses, or monthly services such as Adobe Cloud or web hosting? These are all things to keep track of which can be used as deductibles against your net.
Did you make any large scale business purchases in the past year such as new computers, laptops, cameras or equipment used for your business? One word to consider – depreciation. These types of purchases fall under assets for your business. They can be deducted all at once or you can deduct a portion of the asset over multiple years.
Did you make more than 5k in the last year freelancing? You may want to consider making quarterly tax payments to ensure you don’t owe the IRS a large sum at the end of the year.
Did you have any other legal or professional expenses? Attorneys and accountant fees will fall under this category. Remember you can even deduct what you paid to either a CPA or tax preparation service from last year on this year’s taxes.
Another favorite deductible is meals and entertainment. This should certainly be done within reason as any food or drink expenses that are deductible are those strictly incurred while having a business meeting. The record you keep should be the full cost, but on your tax return reported at 50% of the total cost. Leaving the house to grab a coffee or get some work done is not a deductible expense. We know, we love our Starbucks too! Be warned: ENTERTAINMENT COSTS ARE NO LONGER DEDUCTIBLE!
Last but certainly not least may be advertising. This can include Facebook/Instagram promotions, traditional print advertising, sponsorships and all other expenses related to promoting your business.
Ask your tax professional about “Qualified Business Income Deductions.” You may qualify for a 20% deduction of your net income.
We of course recommend for any questionable areas to certainly consult with a tax professional as well. The more documentation you have and the better organized you are can save you in the long run especially if your tax preparations and submissions have come down to the wire.
