The title of this post might imply that I left money on the table by getting the short end of the stick while negotiating a freelance writing gig.  That’s not the case.  I’m talking about leaving tax deduction money on the table.

Organizing Tax Deductions

After spending pretty much the entire day a few days ago cozying up to TurboTax, I realize I can do a much better job at categorizing my freelance writing expenses.  Even though I use the Quicken software, I have a true love/hate relationship with it.

It’s an extremely useful tool if you take the time to work the tool properly.  However, because I haven’t truly set it up to get the maximum benefit from my Quicken setup, I hate it (sort of).  I’ve been using it for eight years and I still haven’t taken the time to use it properly.  My brother, on the other hand, loves it and goes on about all the wonderful things he’s doing with it (Yadda, yadda…who cares).  My brother has always been an over achiever!

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Freelance Writing and Taxes

As I was going through Turbo Tax’s endless questions about my freelance writing business, it forced me to look at how poorly I organized my Quicken categories. I realized that over the past couple years I’ve left money on the table and did not take full advantage of my independent contractor freelance writing status.  There are legitimate expenses that I failed to claim.

Eating for the Art of Writing

One of the greatest things about being a freelance writer is that you can write about anything and do anything you want and legitimately write off the expenses related to it (provided its not considered a hobby).  I realized I was on to something when I was able to partake of my most favorite pastime in the world…eating out.  I created my Visit Hudson Valley website to accommodate my desire to eat out and write restaurant reviews.  The meal and associated travel expenses are tax deductible.

Spruce Up the Office

My home office can use a total overhaul.  I’ve neglected it because of the “mom complex.”  After all, the kids needed sneakers, cheerleading outfits, school books, football cleats, money for trips, etc.  I treated my office as I treated myself.  Kids, hubby, (even Fido), first and then I get the leftovers.

Well, the sneakers and cheerleading outfit, etc are not tax deductible.  However, a fresh coat of paint for the home office, new carpet, office furniture, new computer, etc., etc are all 100% tax deductible.  What?!  You mean I’ve been operating in squalor when I could have the jammy jam office (to use an expression that hubby likes to use).

Naturally Frugal

I’ve developed a naturally frugal personality.   I was probably born that way.  While it’s an admirable quality as a homemaker and a mom, it’s not so admirable in the business world. In the business world being too frugal means that you have to pay taxes on your frugality.  So, I guess in order to help President Obama stimulate the economy, I’d better get out there and spend a little money updating my office, eating a few meals, heck I could even go rock climbing and write about the experience on my Hudson Valley site.  The sky is the limit.

Advice and Caution

Two words of caution:

1. I strongly suggest you read the IRS publication 587 before you go willy-nilly spending a lot of money revamping your office only to find out that it’s not considered a business deduction.
2. Differentiate between a hobby and a business.

One word of advice: Capitalize on your passion.  The internet makes it easy to make money with your passion.  If your passion is collecting tsetse flies, create a tsetse fly website and write all about it.  The expenses related to collecting the little buggers may be tax deductible.  Go ahead, have fun and make money (don’t forget to keep your receipts).

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