Resume Writers & Estimated Taxes

If you’re a self-employed resume writer, then you are responsible for paying your own taxes. In contrast, if you work for someone else then taxes are automatically taken out of your paycheck. Depending on your annual income and your circumstances, self-employed iresume writers may be required to pay taxes on a quarterly basis.

Check with your accountant or refer to past tax returns to determine if you can pay annually or need to pay quarterly. There’s no disadvantage to paying quarterly. You can, on the other hand, be assessed fees if you decide to pay annually but earn too much (and should have paid quarterly).

The 1040ES is a form that will help you estimate your quarterly taxes. It’s available here –

https://www.irs.gov/forms-pubs/about-form-1040-es

You can also learn more information about quarterly tax payments and what is required here - https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

Once you know how much you need to pay every three months, it’s time to create a plan to save for it. This isn’t your emergency savings plan. This is a different savings plan designed to take the financial pain and stress out of paying your taxes.

Step One: Where Will You Save The Money?
Unlike an emergency savings plan, your tax savings doesn’t need to be stored in a separate account. If you keep good records you can simply keep your tax savings in your standard business checking account. If you believe you might be tempted to spend the money, then open up another savings account specifically for your quarterly taxes. 

Step Two: Weekly or Monthly?
The easiest way to build your savings is to establish automatic deductions. For example, you may have $500 deducted from your business checking account each month and added to your tax savings account. To determine how much to deduct, simply divide your anticipated quarterly tax payment by three months or 12 weeks.

If you are keeping all of your money in one account, you’ll want to make sure you build up the amount in your account on a monthly basis so when tax time comes around you have enough money ready.

Step Three: Add It to Your Budget
Treat your quarterly taxes as any other business expense and incorporate your monthly tax savings into your monthly budget. By doing this, you’ll make sure that you always account for the expense and never fall short. When tax time rolls around you’ll be stress free and in the black.

Saving for your quarterly taxes may not be fun, and there are certainly other things you’d like to do with the money. However, by creating your quarterly tax plan you will remove the stress of paying taxes and you make sure you’re not hit with a large payment (and possibly even financial penalties) at the end of the year.

Tax Deductions for the Self-Employed Resume Writer

As the end of the year approaches, it's time to start thinking about taxes. Yuck. I know.

When you own a resume writing business, there are a lot of things to consider. One of them is taxes. It will take you a little longer to get them done than someone who is a W2 employee, but there is one upside — tax deductions for the self-employed.

When it comes to taxes, there is a lot to know. As a self-employed professional, things can get a bit more complicated because you work for yourself. When you work for a company, your wages are subject to taxes. You fill out a W-2 form and the company does the rest. You can see on your check what has been deducted for state, federal, and social security tax. It's a no-brainer for the employee. I'm jealous for some of my jobseeking clients when I think about the ease of getting a W-2 form. I'd have my taxes done when there is still snow on the ground in Nebraska if I were an employee!

But alas, I've been self-employed since 1996.

Most self-employed people receive their full pay for their services. Taxes are not taken out. This gives you an advantage when it comes to utilizing as much of your money as you can. But, tax time comes and it's time to settle up with the IRS. This involves calculating all of the income you've earned from clients, and then figuring out your tax deductions. Deductions in the form of tax write-offs can reduce your taxable income. This can change your tax bill.

Tax Write-Offs 
Here are a few of the tax write-offs that you may be eligible to deduct as a self-employed individual. A full listing can be found on the IRS website. Turbotax also has a good list of possibilities for 2012. (Check with your tax professional for specific advice and guidance, of course.)

• Home office — This deduction has tripped people up for years. Basically, you will need a dedicated office space in your home for your business. Conducting business occasionally from your computer in the family room doesn't qualify that space for a tax write-off. But, when you have an office set up, you are also eligible to deduct a portion of the utilities too. (You calculate the total square footage of your home, and the square footage of your "office" and then can deduct expenses as the percentage of your office compared to the total home.)
• Travel expenses — Did you attend a resume writing conference this year? Time to pull together those records -- conference registration fees, airline tickets, meal receipts, gas receipts, and other incidentals. A percentage of these expenses are deductible because they were incurred in the transaction of your business.
• Medical expenses — Because you are not employed by anyone, your medical bills are your responsibility. However, you can regain some of the insurance premiums you paid on your tax return. The exception to this rule is when your spouse is eligible for family insurance at their job and this could cover your medical needs. Again, check with your tax professional. Also: Look into a Health Savings Account as a way to increase your deductions for expenses you're already paying.

You work hard. Make sure that you claim all tax write-offs that are due for your resume writing business.