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April 15 is just around the corner! And if you’re thinking about claiming your writing expenses when filling out your forms during the upcoming tax season, the time to get organized is NOW. If you don’t plan ahead, you may end up scrambling at the last minute—and might even lose out on some deductions. Or worse, you may end up paying penalties. Writer’s Relief has a few suggestions to help you organize your records so that preparing your taxes won’t be so stressful.
How To Organize Your Creative Writing Expenses For Easier Tax Filing
Maintain accurate financial records. Keep your writing income and expenses separate from your non-writing financial records. One of the simplest ways to do this is to open a bank account exclusively dedicated to your writing financials. This will simplify the process when it comes time to prepare your yearly taxes. Depositing writing earnings and paying writing expenses with this account not only helps you stay organized but gives you an accurate financial picture of where you stand as a paid writer.
Another good reason to track your writing income: Proving your income as an author is required when joining some of the more prestigious writing groups such as Mystery Writers of America.
Save your bank statements. In today’s world, most of us opt to go paperless. Some banks still send out a paper statement every month, while others will e-mail you a digital monthly statement. Store these e-mails in a folder in your e-mail software program, or save any attached statements to a folder on your computer solely dedicated to these records. If your bank does not provide you with any statements each month, simply log onto your bank’s website at least once a month to save and print your transaction report. This will serve as your bank statement when preparing your taxes.
Categorize everything. It’s simpler than ever nowadays to maintain a checkbook or journal of your writing financials. Tedious, handwritten records are a thing of the past! By using financial software such as QuickBooks or Quicken, you can easily categorize your income and expenses and create simple reports to help you with the tax process. Many of these software programs can even obtain the information directly from the bank so you can skip the entering process and get right down to classifying the transactions! This software can also assist you with budgeting and show you areas where you may need to allocate more money or cut down on spending.
Keep receipts! You can’t simply say that an expense was writing-related—you need to prove it too! File any paper receipts from any real-world purchases and print out (or even better, save PDF copies) of any online expenditures for each and every writing-related transaction. Your tax preparer will definitely want to see them, and the various government tax agencies may even require that they accompany your tax return. Keep your paper and digital receipts in one designated location so that they are easily accessible when it’s time to file your tax return.
Whether you prepare your own taxes or use an accounting or tax service, following these steps will save time and help the chore of tax filing go smoothly—so you can get back to writing!
Caveat: We’re not accountants or attorneys, and this article is for information purposes only. Always speak to an accountant about your personal tax situation. Tax laws are constantly changing, so always check for the latest updates via official channels.
Question: What organization tips would you add to this list?