Lesson Learned: Freelancer Taxes

About two months ago an app was brought to my attention for tracking driving miles. I installed it on my phone, but after reading mixed reviews about it not always tracking drives, I let MileIQ sit unused. I finally fired it up about two weeks ago to test it out on an in home lesson drive that I have been taking since February, and TA-DA! $9.50 to claim for taxes this year. I was full of excitement and dread at the same time. Excitement because logging miles will really help me in making ends meet, and dread because until two weeks ago I had never tracked a drive.

Now I find myself working through the time consuming task of manually entering all the drives I have completed until this point. With this one trip alone, from February until now, I am almost up to $140! My phone calendar is a lifesaver; as I was always on top of changing schedules and logging events into my phone, so at least I know exactly when I was driving as I sludge through this project of catch up.

Lesson Learned: Track your driving miles the day you drive them! Even if you are unsure if it will make the cut at the end of the year, at least you will have everything on record to make that decision with!

Save me…

So having made this painfully pleasant discover of tracking miles, I suddenly had opened a whole can of worms about what else I should have been keeping track of. For me, this also meant materials. The music books and teaching aids I have been restocking and collecting over the course of the year. Luckily this was not as big of a project as the driving miles, but I still pulled together my receipts for about $200 in items I bought just for teaching. I have no other random need of 50 gel pencil grips, car pin striping, and sponges than to help my kids with all of their basic set up needs.

I did however find that I could not find one receipt, and I believe I remember having thrown it out before I moved. It likely would have been another $40, but no receipt means no proof…

Lesson Learned: Make a folder just for receipts related to your work costs. You do not have to log them into an excel spreadsheet like I did this morning, but at least keep the hard copies in a safe spot!

There are two more cards on the table that I am still working my way around. The first being, that as a freelancer many of your employers will not withhold tax. You are responsible for both your tax and the tax an employer withholds for you. I am my own boss as well as the worker, so I may get smacked with a double whammy in the end.

The other is quarterly taxes, which I had heard about once prior to this month. Another freelance violinist had mentioned, and sounded regretful, that she did not pay quarterly taxes this year, rather than waiting for the end of the year. Apparently, from what I have read so far, that if you are expecting to pay over $1000 in taxes you should be paying quarterly. The government does not like you getting paid without it getting it’s share of your hard work, so I believe I read there is even a fine for certain tiers of taxes if you do not pay quarterly.

Luckily, I am still very much a small fry, and will likely not make enough to have to worry about either of those two issues much, but they are something I need to have a better understanding of for the future.

Lesson Learned: Plan in advanced! Know what you are going to need to do for taxes before it is after the fact. I am still learning this one, but hopefully I caught my mistakes in time, and a brief talk with a CPA will help straighten me all out!

Tax season will be here before you know it!

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