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Wednesday, April 15, 2009

Tax Day - Keeping the Record by Diane Gaston

April 15, the dreaded TAX DAY.

If you are like me, you hate the idea of doing taxes. It's been years since doing taxes was easy and all I had to find were the W2 forms. As life became more complex so did the taxes. A few years ago we decided to use an accountant to do them for us. Expensive, yes, but worth every penny to keep me from having an anxiety attack.

Using an accountant does not prevent my having to keep records, unfortunately. Every year I vow to do better so I don't have to search through five boxes to find everything. This year my first search failed to discover my husband's W2s (panic time....) I did find them, but I didn't find the record of my personal property tax. That required a phone call.

It did occur to me that I could make my life easier next year. Here's how. (and it is so simple)

1. Keep an excel record of my writing income and expenses. I started this a couple of years ago and even though I slacked off in the middle of the year, it saved me so much time.
Here are my writing categories:
Income, Website, Promotion/Advertising, Travel/Meals, Conference Fees, Contests, Dues, Books/Magazines (for research), Books Promotional (my own books purchased to use for promotion), Supplies, Postage
You might have other categories.

2. Keep all your tax records in one place.
I use a clear plastic envelope and this year I vow to put everything I'll need for taxes in it so I don't have to search through several boxes come April 10 next year.

I used to keep organized files of bills and statements in an accordion file, each section nicely labeled. Including one labeled "taxes" but I never actually needed 99% of those records. Now I keep everything in a box and search it only if necessary. I learned my lesson, though. For the few things I need for taxes, file them in one place.

That's it!

Any other tips? I'm open to learn....

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At 5:33 AM, Blogger Gillian Layne said...

The day my husband started traveling while working, and so had to file several different state income taxes, we called an accountant. Best move ever!

I keep different records in different colored folders, or try to. You've offered great advice here, thanks. :)

At 7:47 AM, Blogger Diane Gaston said...

Amen, Gillian. I think I'd panic big time if I had to worry about multiple state taxes! Hooray for accountants.

At 11:51 AM, Blogger Gillian Layne said...

Diane, I like the list of things you've laid out to be considered. Contests I don't think would have occurred to me. Are there other things you were surprised to have deducted, things people might overlook as writing/author expenses?

Seriously, I was thinking how beautiful you all look on Rita night. Could clothing for conferences, say if you were a presenter, be deducted?

At 12:35 PM, Blogger Dianna Love said...

Good suggestions, Diane.

I've had to deal with taxes for many years between personal and my businesses. You're so right, unless your taxes are very simple - get a professional.

At 2:04 PM, Blogger Mo H said...

I put everything in a clear ziplock bag. I'm liking the excel spreadsheet to go along with it. Thanks!

At 2:16 PM, Blogger Diane Gaston said...

Gillian, I don't know for sure, but I doubt that the clothing a presenter wears would be deductible. But that is why I hire the accountant. If she says I can deduct something like that, I would do it!

Maureen, your ziplock bag is an even cheaper way to save records!!!

Dianna, now that I use an accountant, I no longer have anxiety attacks over the taxes.

At 2:40 PM, Blogger Gillian Layne said...

Bummer.*G* But being able to deduct research books is pretty sweet....

At 2:44 PM, Anonymous Anonymous said...

First, I have labeled envelopes in which to keep bills, etc, all kept in the same box. Then I have a single-page document that lists everything I need for my taxes, including what I paid last year, both the taxes and the fee, fed and state. I've almost forgotten some important deductions, until I created the list. It also saves me from having to pull out last years stuff. When interest documentation is sent, in January, it reminds me it's time to gather all my documentation in one place. I like the idea of an accountant but haven't been able to justify one yet.

At 8:27 PM, Blogger Terry Odell said...

I found it helpful to categorize expenses and income according to the categories that Schedule C was going to demand. That way, I could get them all into the right place. I wasn't 100% successful (being lazy) but I'm working harder to write down which category everything belongs in.

If I were REALLY organized, I'd file them all into separate file folders/envelopes, but I know that's wishful thinking.

Remember to record mileage for all those trips to the post office, or to chapter meetings, or even to the bank to deposit your royalty checks. That really adds up.

At 8:45 PM, Blogger Diane Gaston said...

Terry, recording mileage is way too much for me. I'd never remember!

At 8:49 PM, Anonymous Anonymous said...

Diane, when I still had my car, I simply kept a little notebook in the car with a pencil. Once I got in the habit, it felt odd not recording the mileage. :-) And it does add up.

At 8:52 PM, Blogger Diane Gaston said...

Sigh! I know I should, Judy...

At 8:54 PM, Blogger Terry Odell said...

Diane - I have a little pocket calendar in my car. Anytime I go somewhere for a writing releated trip, I'll jot it down. A lot of the trips are the same -- I know how many miles to the PO, the bank, to my RWA chapter meetings, etc. And if I go to a conference, those miles really make a difference at tax time.

By keeping the calendar in the car, I don't forget (OK, sometimes I do, but the odds are much better. I think I accrued several hundred dollars in business expense deductions just for mileage.)

At 9:01 PM, Blogger Diane Gaston said...

Okay, you are convincing me this is a good idea!
I've got plenty of little notebooks I could use.

At 8:24 AM, Blogger Louisa Cornell said...

Now this is the scariest aspect of becoming a professional writer to me. I know it is my absolute dream, but as a hedonistic musician I always had an accountant to take care of all that.

I finally got a checking account after 15 or so years of not having one. The cool thing is that checking accounts have changed. I can keep all of my stuff on my bank's online banking site. It even has a place for me to categorize everything that comes out of my checking account. Every time I enter a contest or buy research books it gets labeled a writing expense just in case I sell a book this year. Really neat!

At 8:57 AM, Blogger Diane Gaston said...

Every time I enter a contest or buy research books it gets labeled a writing expense just in case I sell a book this year. Really neat!Louisa, O Doggie One, you don't have to wait until you are published to claim your writing expenses. You just have to prove that you are doing this with the expectation of earning money, that is, not as a hobby, and you could easily prove that, if asked, by showing you are submitting to publishers and agents.

I claimed my writing expenses before selling. Now, I probably would not have claimed a trip to England... to me, that would be a red flag to the IRS, although I probably could have justified doing so.


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