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December 11, 2002, 12:10:47 PM
December 11, 2002, 12:10:47 PM »
I was going to post this as "anonymous"
but I guess I shouldn't be ashamed of
being a bit clueless with the subject of
taxes. I'm new to this so I have some
questions. I was a student and didn't
make much money the last three years
but this year I will have to do my taxes. Is it
realistic to do your own taxes or do most
illustrators use a tax person? I was trying
to do my own but I honestly don't know
where to start. I tried reading the GAG
book but it's not written for someone
starting out with no knowledge of taxes. Is
there any book (or website) that deals
with a beginner's guide to taxes for
illustrators? I need "The Illustrator's Tax
Guide for Dummies". Most of my
illustration clients had me fill out W-9's
but most of the income this year has
come from various galleries around the
country, and they never sent me anything
in past years (if they don't send you
anything are they even reporting it to the
govt.?). I also just got married which will
probably complicate things further. Come
to think of it, maybe a tax person would be
best. How do I find someone experienced
with freelance artists? What should I
expect to pay for their services? And
what kind of documentation will they
need? Sorry for all the questions, I
missed the day on taxes in my small
business class when I was in school. Any
help will be appreciated! Thanks!
December 11, 2002, 01:35:43 PM
Reply #1 on:
December 11, 2002, 01:35:43 PM »
On 12/11/02 6:10:47 PM, J S wrote:
>I was going to post this as "anonymous"
>but I guess I shouldn't be ashamed of
>being a bit clueless with the subject of
>taxes. I'm new to this so I have some
>questions. I was a student and didn't
>make much money the last three years
>but this year I will have to do my taxes.
>Is it realistic to do your own taxes
>or do most illustrators use a tax person?
I can't speak for "most illustrators," but many have accountants--if for no reason other than to have someone who keeps up with new regulations, can remind them to get those quarterly payments in, etc. I understand that there is a Quickbooks tax program which is good; I haven't tried it myself, but some people I know swear by it.
Part of the issue with doing taxes is knowing what expenses are or are not deductible; a problem even when your income is entirely earned income from commissions. When you start getting into issues of capital gains or losses, or the amount of depreciation you can take on a piece of equipment (such as a new computer), or whether to put money in a traditional IRA, a SEP IRA, or a Roth IRA, it is useful to have an accountant to talk things over with.
>I was trying to do my own but I honestly
>don't know where to start. I tried
>reading the GAG book but it's not written for
>someone starting out with no knowledge
>of taxes. Is there any book (or website)
>that deals with a beginner's guide to
>taxes for illustrators? I need "The
>Illustrator's Tax Guide for Dummies". Most of my
>illustration clients had me fill out W-9's
>but most of the income this year has
>come from various galleries around the
>country, and they never sent me anything
>in past years (if they don't send you
>anything are they even reporting it to the
>govt.?). I also just got married which will
>probably complicate things further. Come
>to think of it, maybe a tax person would be
>best. How do I find someone experienced
>with freelance artists? What should I
>expect to pay for their services? And
>what kind of documentation will they
>need? Sorry for all the questions, I
>missed the day on taxes in my small
>business class when I was in school. Any
>help will be appreciated!
You don't get 1099 forms from clients unless they've paid you more than $600 in the course of the year. That doesn't mean they didn't report the income. Don't go there; assume that if you've been paid, it has been reported. The question is, how much of that income is offset by deductible expenses.
A good accountant can run anywhere from $150 to $500 or more to handle your taxes, depending on their fee schedule and how complex your income patterns are. It's a deductible expense. You should ask other artists in your area who they use, whether they are happy with that person, etc.; interview the accountant and see if you are comfortable with the person who will be privy to your financial information. If not, keep looking.
Daniel Abraham, Esq.
DISCLAIMER: Material posted on the Legal Easel™ chatboard discusses general principles of law in response to issues of concern to the illustration community. Nothing in this website or the Legal Easel™ chatboard should be construed to be a substitute for advice of counsel regarding the specific facts and circumstances of an individual case. Laws and their interpretation differ from jurisdiction to jurisdiction. Legal advice addressing a specific situation should be sought from an attorney duly licensed in the appropriate jurisdiction.
Daniel Abraham, Esq.
December 11, 2002, 04:35:49 PM
Proud Member of the Graphic Artists Guild
Reply #2 on:
December 11, 2002, 04:35:49 PM »
I searched out a certified public accountant who already had ad agencies as his clientele. It was a sheer bonus that he used to be a auditor for both the IRS and the State. After he quickly helped me learn my various categories of deductibles I was able to go into Quicken and categorize my purchased and income. Come tax time I simply print out a profit loss statement and send it in to him for review.
Because designers and illustrators are often placed in a weird tax category, we are more likely to get reviewed by the IRS. Having a certified public accountant to deal with the IRS problems when they arise is a real comfort.
In the 8 years since I have been using my accountant, I have received 5 letters from the IRS. Once claiming I did not pay for a year. The accountant was able to take care of it without breaking a sweat. Also, the money I save by using accountant more than makes up for the small bill he hands me.
7622 S. Yakima Ave.
Tacoma, WA 98408-5315
"Home of the Creative Mind!"
"Home of the Creative Mind!"
December 12, 2002, 03:15:43 AM
Reply #3 on:
December 12, 2002, 03:15:43 AM »
I would suggest asking around to other illustrators who
live in your area. (Teachers?) for accountants they use and
like) Finding an accountant that is used to working with
illustrators is a good thing. As stated above, things like
depreciation of computer equipment and schedule C's are
not really that easy for an individual to do using something
like Turbo Tax. $400 bucks may seem like a lot but an IRS
penalty and interest can easily add up to much more than
that if you make a mistake on your own. If you are ever
audited having an accountant by your side can be a huge
help as well.
December 12, 2002, 04:43:54 AM
Reply #4 on:
December 12, 2002, 04:43:54 AM »
It's well worth the money to hook up with an accountant for all the reasons already given.
I've been with mine for over 20 years and pay him only $250.00 at the one sit down a year where I bring my receipt totals and he actually prepares my taxes. (My wife handles the rest of the paperwork and I sit back and doodle empty pockets with moths flying out and money with wings and stuff on an envelope...)
I found him through a friend that was a self- employed plumber.
Throughout the year, I may call him to answer
a question or two.
December 12, 2002, 05:05:50 AM
Reply #5 on:
December 12, 2002, 05:05:50 AM »
I have to agree with the others who suggest an accountant. I found mine by talking to other local freelancers/artists and he has been wonderful. I not only pay his bill with a big ole smile but on several occasions I've dropped off a good bottle of wine with the check. If you are really determined to do your own taxes then I suggest that you have an accountant do them for a year or two so that you can learn from him/her.
I know my husband considered taxes some sort of unspoken challenge from the government and swore his way through them for years. But once I was a full time as a freelancer things became more complex and I took them to an accountant. My own sanity was restored.
The accountant gave me categories into which my expenses would fit, and told me how to gather and organize my receipts. He gave me a very quick but thorough lesson in keep my own books, for that alone I adore him. Since I do that preliminary paperwork instead of simply throwing a stack of receipts at him, the cost for my taxes is less than some of the other less paper-savvy freelancers who go to the same guy.
He has handled all problems with the IRS without it costing me anything in penalties, and even some minor issues for my kid brother. If/when you find a good accountant, stick with him. Life is so much easier. I had used another one before this guy, your basic H&R Block kind of place, and they made some wonderfully stupid errors. I took their mistakes to this guy and he fixed them. The IRS claimed I owed thousands, but after he reworked the return I paid out only about $300 to them. I'll never complain about the fee he charges, because after that run-in with the IRS I know the service he provides is well worth it. The IRS claimed I owed thousands, but after he reworked the return I paid only about $300 to them.
Ask around, I'm sure other freelancers can tell you who they use and who to avoid and now's the time to start asking.
Best of luck -- Jill
December 12, 2002, 01:07:26 PM
Reply #6 on:
December 12, 2002, 01:07:26 PM »
Accountant by all means. If you're just
starting out and your taxes are relatively
simple, just go to HRBlock or whoever.
I've had two iller friends now that have
gotten dragged through hell itself
because they didn't deal with the IRS in
the plane of reality. I had an uncle
commit suicide over it this fall. Don't even
mess around, even though Bush is using
our tax dollars to aid the quest for the end
of the earth.
If you're in the Bay Area, call Stern and
Associates in SF, he's the best and I've
been using him for years.
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