Tuesday, December 15, 2009

Those Tricky Tax Questions

or, "What if I Only make $599?"

I have a post begun that continues last Tuesday's musings on character creation. However, several notes in my in-box this morning have made me momentarily switch gears and start thinking end-of-the-year thoughts.

Namely: "TAXES."

After the banner year that was 2008, thanks to several excellent opportunities (and one or two desperate clients), 2009 has been rather uninspired when it comes to the bottom line. Until recently. Suddenly, business has exploded as clients realize that sometimes it IS best to hire someone (me) who plays at things they work at...

Which means that though the year began with a bang that faded to a whimper over the summer, it will finish with a very strong and lusty yodel. I see a sea of 1099's in my future. My poor tax preparer...

In addition to clients bringing writing jobs, my in-box also featured the following e-mail from a former writing student:

Now that I am starting to get a few more writing credits (two articles accepted on a kid's website paying $35 apiece and an article on a mom's website coming out in Jan. in addition to about 11 book reviews so far)...

(I am SO proud! ::sniff::)

...I am starting to apply for higher paying freelance jobs. Well, these leads come from the web which can be a scary place. I have NEVER been asked nor never given my SSN. Yet, the jobs I have been paid for have paid very little, so I don't think they need it anyway unless it is over $500. I am keeping track of what I am pd. and will declare that for taxes, of course. Anyway, if I ever do get a job that pays more than $500, is there any way around submitting my SSN, in case it's a scam? I have read a little about getting an employee identification number that can be used in place of a SSN, but I know very little about that. Any thoughts or help would be appreciated.

OK - realize first and foremost that I AM NOT A TAX ADVISOR! I am a person who will happily wrestle with words all afternoon, but put me in front of a few numbers, and I quickly cry "uncle" and look for any easy out. It's not that I can't "do" the math. It's just that I HATE it. Which is somehow even more embarrassing.

So, now that I have ascertained that anything I might say on the subject of taxes is completely suspect, here is my response to the question:

If the job is legit, and you make over $600 (I believe that's the magic number now) from a single source -- not from a single job -- in a year, they will require your SSN in order to issue you your 1099. (As you probably know, we freelancers are generally considered contract workers.) Ask your tax preparer about getting an EIN -- I have one and, as I recall, it was relatively painless and involved less than the usual amount of bloodletting.

Generally, you don't need to submit your SSN until the company is issuing 1099's. Many legitimate places will issue you a check for work completed without having your ## on file.

WiseGeek posted this interesting article on the realities of being a 1099 contractor.

If you are worried about the validity of a site, or if a job makes your scam-meter go ::beep::, be very careful. However, by law a respectable employer has to know your SSN (or equivalent) in order to complete the federal requirements on their side...

Always check out Preditors & Editors, Absolute Write, and Writer Beware, if you have any doubts about the legitimacy of a job. It's often helpful to also do a search on the potential publisher's name, paired with the word "fraud" or "scam" and see what crops up.

...Ah, the joys of freelancing! If we have no tax questions, that means we are not working. My goal every year is to make enough money so I am HAPPY that I have to pay my "tax lady" to sort it all out.

Here's hoping that every writer reading experiences the same feeling of joy!

1 comment:

Joyful Alternative said...

Interesting how your work flowed in 2009. As a copyeditor, I had a scary first quarter, with one big job carrying over from 2008 and then just one drawn-out ill-paying project. Plus clients were laying off production editors (my contacts) or doing copyediting in-house to avoid laying off staff.

The rest of the year has been normal or better. Hallelujah!