April 15, the tax filing deadline for Americans, is almost here. If you’re a freelance writer, especially if you do your own taxes like I do, it’s critical that you take as many deductions as you can to lower your tax bill. Why? Because running an online business can be very inexpensive, which is one of the reasons many are so drawn to the profession. If you have a computer and an Internet connection, you’re pretty much ready to go.
So, here are five things you probably didn’t know that can help you lower your tax bill, making the difference between owing (possibly a lot) and getting a minimal refund.
1. PayPal Fees: Do you deduce them? Almost every time you receive a payment, PayPal deducts fees, which are mostly 2.9% + $0.30 per transaction.
For international sales, PayPal’s fee is 3.9%, plus a flat fee based on the currency received. FYI, PayPal fees may be lower if you sell more.
Visit PayPal to learn more about their transaction fees, and don’t forget to add this column to your expense sheet in the future, okay?
2. Bank fees: For example, let’s say you’re a travel writer and you go out and use an ATM that charges you fees for withdrawals. This is a legitimate and deductible expense, because it is in an allowance.
3. Recurring fees: For example, I publish electronic books. So I use an ebook cover making site to help me with the designs. The monthly fee for this site is $9, which comes out of my PayPal account every month. I can go three or four months without using the site (because I also outsource some of my e-book covers), then two or three where I use it all the time.
My point? It’s easy to forget about these expenses, and if you have two, three, or four accounts like this (eg magazine subscriptions, software subscription sites, paid newsletter subscriptions, etc.), it can really add up to $400, $500 or more per anus. – that you could be deducting as legitimate expenses.
4. Electronic file: If you’re in danger of missing the deadline (which could cost you penalties and interest if you owe), consider filing your taxes electronically. Why? Because returns filed this way tend to process faster.
5. No files and save money! Did you know that if the IRS owes you money (ie, you’re waiting for a refund), there is no penalty for filing late? Good is true! According to the CNN article, Do You Owe a Refund? There is no penalty for filing late:
If you’re due a refund and don’t file your taxes by Tuesday, you won’t get a penalty. It has always been this way, but many people do not realize it. The IRS is eager to get your tax revenue. You’re less concerned with doling out refunds to people who haven’t claimed them yet.
So if you have a deadline you’re trying to meet (where you make money) and you don’t have time to file taxes (which costs you time), by all means, meet that deadline. If you’re owed money, the IRS won’t penalize you for filing your taxes late (I wish this applied to me!).
Happy filing, and if you’re going to be filing late and owe, here’s a great tax calculator to estimate what you need to send.