- Not DIY - Taxes is not a do it yourself endeavor. Speak with a CPA or tax attorney when it comes time to deal with your taxes. Tax laws are always changing and you must stay current. One minor mistake with your taxes and it can cost you thousands of dollars. Leave your taxes to the tax professionals.
- Tax Write-Offs - Take advantage of all the tax write-offs you can. As an online writer, you are using the internet and electricity. Portions of these expenses can usually be deducted from you taxes. If you write from home, measure the amount of "office space" you use. This can usually be deducted from your taxes as well.
- Start an SEP Plan - An SEP Plan is a "Simplified Employer Pension." They are fairly easy to set up. Contributions to your SEP plan are tax deductible and usually exceed the deductions of an IRA. An SEP plan will allow you to save for your retirement.
- Miscellaneous Expenses - Remember to deduct miscellaneous expenses from your taxes. Save your receipts for paper, pens, paper clips and the like. Any additional computer programs or computer equipment you purchase to help with your online writing may also be tax deductible. Gas back and forth to the library and to pick up additional supplies may also be tax deductible.
- Health Insurance - Health insurance and other medical expenses may also be tax deductible. Chances are that as an online writer are paying for your health insurance out of your own pocket, not part of a group plan, and you should do all you can to deduct a portion of that from your taxes.
- Saving for Taxes - Online writers should should save a portion of their earnings to pay their taxes. Depending on your tax bracket, the specific percentage will vary greatly. I recommend saving 35 to 40% of all your earnings to pay taxes. That should cover federal, state and local taxes as well as Social Security and self-employment taxes. Hopefully, that percentage will be higher than your actual taxes. Saving that much money is not always easy, but it certainly isn't as hard as scrambling for the money to pay your taxes when they are due.
As much fun as being an online writer is and getting paid for it, you have to deal with the not-so-fun business of taxes. Speak with a tax professional or tax attorney before you make any type of decisions or try to get deductions. Tax laws vary and are constantly changing and you do not want any trouble with the IRS. It can not be stressed enough - SPEAK WITH A TAX PROFESSIONAL OR TAX ATTORNEY!