Sunday, February 8, 2009

Tax Tips for Freelance Professionals

Here are some tips and strategies for thinking about your taxes. There are special circumstances that apply to freelance writers and other creative professionals, so I will highlight what you need to know to prepare your taxes and to avoid IRS investigations.

First, let me start with some fabulously great news. Being self-employed is quite possibly one of the best tax strategies available today. Other good tax strategies include being a landlord and being an investor. All three strategies have one thing in common: you are in full control of your tax situation, and you can reduce current income by any losses you have from freelancing, renting out property, or investing.

Second, let me tell you that the IRS is fully aware of the tax benefits of being self-employed. They are on the lookout for individuals who (1) have high wages, and a correspondingly high business loss, or (2) have business losses year after year. If you are in one of these situations, you need to start thinking about how to protect yourself in case the IRS audits or "examines" your tax return. We'll discuss that later on.

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