Wednesday, February 25, 2009

Taxes Schmaxes

This week I've been working on getting my/our tax info together. Its really all my info. Jim Dear's is a lovely simple W4 that comes all nice and neat, all the boxes filled in by somebody else. Mine is a manilla folder full of receipts and bill stubs that has to be sorted through, added up and recorded. And I don't even do the actual filing. Oh no, we have an accountant who's job it is to remind me of any deductions we may have missed. FYI for any other freelancers out there, especially those with kids - I've been delighted to learn that you can deduct all of your out-of-pocket medical payments. If you have kids in any kind of daycare you know those co-payments can really add up.

Sometimes seeing all these end of the year totals can be a bit mind boggling. For example, in 2008 I spent $671 on mailing costs! Good grief that's a lotta postcards. I do hope they all find their way into the hearts of an art director out there. Of course the one that always gets me is how much we spend on health insurance. Our total premium payments were over six grand, with my puny self-employed health insurance being about half that. The reason I say puny is that my deductible on that plan is the same as the amount I pay in premiums. Yet we keep this insurance around just in case Jim Dear finds himself in the unemployment line (and we are without the cushy state sponsored insurance that his job provides.) Crazy as it is, if I had to go out and buy my same insurance now it would be twice as much. Don't get me started on a policy rant but something has got to give in this country when it comes to health insurance costs. How many people are not following their dreams of entrepreneurship because huge insurance premiums for crappy private policies make them fear for the ability to take care of their families?

Most of us artists don't like thinking about our businesses as a business... we just want to paint. But every year as tax time rolls around it comes with a reminder that if we are not making money doing this, it's not a business, it's a hobby. So while I'm sitting here sorting through scraps of receipts and scribbled notes in my checkbook, I'll be thankful that while 2008 was not a financially fabulous year for the Fabulous Illustrator I do still have a business, and I wouldn't have it any other way.

I'll leave you with a list of some of the things you can remember to deduct in case you are looking for a way to bring down Uncle Sam's share:
• mileage (just remember you have to also have a count of total miles driven)
• local and state taxes (don't forget to deduct any sales tax or business license fees)
• homeowners or renters insurance (if it insures where you do your business you can deduct a portion of it)
• medical expenses
• day care expenses (unfortunately only a portion of this as well)
• membership fees for professional organizations (see another good reason to join SCBWI, and don't forget those conference fees)
(disclaimer: I'm an artist not an IRS agent, so be sure and check these with your own accountant. If you get audited its probably not a good idea to tell them you filed your taxes based on what you read on a blog.)

1 comment:

Simon B. said...

Your Health Insurance premiums are in the norm for most states that's based on a high deductible plan. In new york if your self employed there are HSA options that are around 465 per month but that's with a really high deductible. As for the post cards, the forever stamp cant even give you any relief