It’s tax season, the most dreaded season in the entire
year. If you’re new to working from home, you might have a lot of questions
concerning your taxes and where to begin. Here are some simple steps to work on
organizing your taxes for this year and the years to come.
Step
1: Know what is tax deductible.
First and foremost, you will need to know what can be
tax deducted. Pretty much everything around you can be tax-deducted. Did you
know you can tax deduct your water, sewage, electricity, internet, and gas
bills?! Save those receipts and keep them in a folder. At the end of the year,
you will need to know the square footage of your office space, the percentage
of usage from your internet (even phone if you use it for your job), and your
house size to determine how much money you get to deduct from your taxes.
If you spend money on your job, like buying paper
clips, using a stapler, or buying postage can all be tax deducted! Save those
receipts and keep them. However, receipts can fade and a good idea is to scan
them and then attach the receipt to the scan copy with your tax deductible
stapler.
Mileage can be deducted as well if you travel for your
job. Download or buy a mileage tracker to keep track of your mileage because
gas isn’t free and it can add up quickly.
Step
2: Start Organizing.
Start organizing your tax deductible items into topic
related folders. In the Writer’s Market 2014 book, there’s a great article that
discusses how to organize your work so you can quickly and easily add it to
your taxes in Section C. Here are some categories that you will need to sort by
topic:
Contracts (if applicable)
Depreciation (computers, printers, desk; anything that
will last for over a year)
Income
Other (postage, photo copying, books, subscriptions,
membership fees, etc.)
Supplies (paper clips, printing cartridges, paper, file folders,
etc)
Travel (Travels, meals (if eating out on the job or
meeting with a client and buying a coffee, etc), and entertainment for researching
for a client or company)
Utilities (light, gas, heat, electricity, internet
bills, phone bills, etc)
Step
3: Keep Track of your expenses.
This has to be the most dreadful part of all, but you
will need to start keeping a detail record of what you spend and how much you
make from your bank account. Print off your business expenses and income every
month. This will be easier if you set up another bank account for your business
alone. Take the extra measures to be on the safe side and keep track of your expenses
in an Excel sheet. This will be your life saver if the government decides to
audit you one year.
It’s best to always consult with an Accountant to know
how to best prepare for tax season, especially if you’re new to working from
home. These steps are to help get you started and grounded for this time of
year so you can get back to what you love doing.