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Real World Tax Guidance for a Freelance Blogger

Business Finance Self-Employment Tax Planning

Working as a freelance blogger is certainly not a get-rich-quick scheme, but it can help pad your bank account if you’re working a full-time job or even lead to a lucrative career as a freelancer. I myself made the transition from full-time employee writing on the side to a full-time freelancer last year. While I made the decision not to focus on monetizing my blog, the site did provide me with a platform from which I could get other job opportunities.

Freelance blogger using her laptop to write a post.

If you’re a freelance blogger (whether full-time or on-the-side) who earns even a little bit of money, then you’re probably looking for some tax advice to help out with the transition from single W-2 employee to a slightly more complicated filing situation. Don’t worry! The 2017 tax tips below have you covered.

Various ways you may have earned money

Monetizing your blog with ads and affiliate links aren’t the only ways in which you may have earned some income in 2017.

Popular ways of earning money as a freelance blogger include sponsored articles on your site, freelance writing for other outlets, sponsored social media posts, and even speaking engagements. While I tend not to put many affiliate links or ads on my blog, I do write the occasional sponsored article. I also do some sponsored social media posts. As a quick tip, always be sure to disclose if you’re doing sponsored posts on your site or social media by mentioning the partnership or putting #ad or #spon. But the bulk of my income is from freelance writing and speaking engagements.

This variable income from so many different sources has the potential to feel overwhelming when it comes to tax filing. That is why one of the most important tax tips is to track your income efficiently.

Streamline your tracking process

I’ll admit, I don’t streamline my expenses and income the way many freelancers do. There are plenty of software options to track business income, send clients invoices and monitor expenses. I’m rather hands-on and use spreadsheets as well as manually generate my own invoices.

I keep track of expenses in a spreadsheet and always snap photos of receipts to save into a folder on my computer. However, you could use services like Freshbooks to streamline your process. And you should always keep your business expenses separate on a business-dedicated credit card. It also doesn’t hurt to keep a business checking account or at least a savings account for your quarterly-estimated tax payments.

Pay quarterly estimated taxes or prepare for a penalty

There are many tax tips you need to take when transitioning into earning income as a freelancer, but one that is often ignored is to file quarterly estimated taxes. Don’t ignore this!

The IRS wants its cut of your paycheck once per quarter instead of in one massive lump sum at the end of the year. You need to file quarterly estimated taxes with the federal government and your state (assuming you pay state income tax). The filing dates for 2018 are April 17, June 15, September 17 and January 15, 2019.

A good rule of thumb is to get in the habit of setting aside at least 30 percent of each paycheck for quarterly estimated taxes. That way you have the money readily available when it’s time to pay your tax bill.

Now, if you work a full-time job and just blog on the side making minimal income, you could adjust your withholdings on Form W-4 at your day job to cover the extra taxes on your blog earnings. Adjusting your withholdings will take more from your day job paycheck, but it’ll cover what you aren’t automatically paying in taxes on your freelance income. As your side income grows, however, you’ll likely need to start paying quarterly estimated taxes.

Forms to expect

More than likely, you will work primarily as a contractor for your freelance gigs. That means employers won’t send you a traditional Form W-2. Instead, you’ll get Form 1099-MISC.

The tricky part is that not everyone will have to send you a 1099-MISC reporting your income. It’s only required of employers if you earned more than $600. If you earned less than that, it’s entirely on you to report the income without the aid of a 1099 form. Not receiving the form doesn’t mean you can get away with not reporting the earnings under $600. That’s a common misconception and bad tax advice sometimes given to freelancers. You must report all your earnings, whether or not you receive Form 1099-MISC.

If you still work a traditional job, you’ll also receive your Form W-2. You may also get forms from your investments, known as Form 1099-INT. Those are different 1099 forms from the ones employers send, but you should report those earnings on your tax return too.

What you need to get started

The idea of doing a slightly more complicated tax return may want to send you running to an accountant for 2017 tax tips – but you can easily handle your return with TaxAct Freelancer.

To start filing your return, you need to have:

  • all of your 1099s (or a record of income earned),
  • Form W-2 (if you still work with a traditional employer),
  • the log of any earned income not reported on a 1099 form, and
  • your expenses.

The need to find all of that information is why you should be diligent about tracking all of your business expenses throughout the year. Whether you use software or a spreadsheet – you need to make a note of all your business-related transactions.

When to get started

Like Form W-2, employers are required to send your Form 1099-MISC to you by Jan. 31. It’s important to keep in mind not all your clients or employers will send a 1099-MISC. If you made under $600, the burden is on you to report the income.

But thanks to you diligently tracking your income, you should be able to start the tax filing process right at the start of tax season. Don’t use the excuse of waiting on 1099-MISC forms to give you a reason to drag your feet. As long as you have accurate records, filing your tax return should be easy.

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