This post is sponsored by H&R Block, but all opinions are my own.
The last thing anyone who owns a small business wants to think about is taxes. However, it’s probably one of the burdens that is always in the back of your mind throughout the year. Thankfully, it doesn’t have to be that way. H&R Block is the best way to put your mind at ease when it comes to taxes. For many new bloggers, taxes are scary, but I’ve partnered with H&R Block to help change that. Keep reading for some tips on how to file taxes as a first-time filer.
1) Get your finances organized
If you’re a freelancer, the first step in preparing to file taxes starts the first day of the year. The more you are prepared, the easier it will be. I track my income and expenses in a simple spreadsheet where I tie expenses to projects or trips. Track everything! Remember that any income you bring in is taxable, so it is just as important to track your income as it is your expenses.
Got a regular job? Whether it’s full time or part time, look out for tax forms from your employer(s) and investment accounts and make sure you’ve got those handy when you’re sitting down to file.
2) Plan ahead for tax season
It’s helpful to know what to expect, especially if you’re filing for the first time. Over 70% of people who file get a refund.
If you’re self-employed like me, I recommend setting aside money from each project you bring in for the self-employment tax. Being a blogger means I run my own business, so Ihave to pay both sides of my Social Security and Medicare taxes, whereas at a normal 9-to-5 job the employer pays both sides, meaning the employee is actually taxed less. For this reason, freelancers will always need to pay some level of taxes, so setting aside a portion of all revenue for taxes is important right from the beginning.
3) Figure out how you are going to file
Now that you are planning on paying taxes and you have a system for keeping track of your finances, it’s time to make a plan for how you are actually going to file. Enter, H&R Block! H&R Block is here to help all individuals file their taxes Not only will you know how much they will charge you to file before you even get started, they will also help you get every credit and deduction you deserve, even without an office visit! H&R Block’s tax professionals are available to help via screen share, on-demand chat and more. They can even review your entire return and file it for you. You don’t have to do this alone!
4) Find all your deductions
While bloggers and other freelancers do have to pay the extra “self-employment tax,” we do also get to deduct qualified expenses from our top-level income in order to decrease our tax liability. For example, if you make $1,000 from a project but you have to spend $500 on expenses related to that project, you will only be taxed on the net $500 profit from the project because you areable to claim certain deductions related to it. However, I do want to note that your expenses should not outweigh your income, because if you show a loss for too many years, the IRS will no longer consider your blog or side-hustle a business and you will no longer get to deduct any expenses. Some popular qualified deductions for bloggers include website hosting fees, software subscriptions, Dropbox/Drive subscriptions, etc.
5) File your taxes
With H&R Block there are so many great options and there is a price point for everyone. In fact, students and others with simple returns can file for free online and even if you want to file on your own, their pros are available to help! Check out H&R Block for more information on how to get your taxes filed this year.
For more lifestyle and business tips be sure to check out my articles on how to work from home and how to work while traveling!