Matt (pizzuti) wrote,

Self-Employment and Taxes: anybody know how that works?

2010 might turn out to be the first year I actually make more than $400 over the course of the year by doing freelance writing. There's a possibility that I will earn considerably more than that if I decide I want to go all-out and do it full time, but that's probably not going to happen.

In any case, I'm already on track to exceed what amounts to about a month's rent from writing.

I don't know how the hell to account for this other than reporting "extra income" on my tax forms next April. I'm assuming it's actually a somewhat complicated and tedious process, as I am told I can deduct the cost of Internet service and new computers and other things I paid for just for writing, as business expenses (and those actually cost me much more than I was paid for writing last year - maybe not this year though).

I've also been told I can walk into Wells Fargo and tell them I need to set up a business account, and put all my freelancing checks there (and buy materials from that account) and my income is what I "pay" myself by moving money from that account to my personal checking or savings. Those self-payments are all I'd need to pay income taxes on (except maybe for business/corporate taxes... which, for me, would be like, what, $0.85 a year?) I can even pay for my health insurance directly from my business account and that doesn't count as income. Is that correct?

I just don't want to get audited by the IRS and learn that I neglected to pay $40 in taxes, and then they'd like, I dunno, come in to take my fucking socks and incense burner or something.

Am I at all on the right track here? As of now, my official business records are this college spiral notebook with handwritten numbers and dried up wine or grape juice on it.
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