It’s tax time again, and as seems to be the case every year, I have writer friends who are cussing and moaning about their taxes, other friends who can’t bear to look at it until 11:59 on April 15, and even a few who habitually ignore the whole thing until the IRS sends them a nasty letter a year down the road. (Don’t do this. Just don’t. It gives me palpatations just thinking about it.)
There is, however, one universal: every single person I know swears that next year, they’ll do better. Next year, they’ll start earlier; next year, they’ll keep track of expenses during the year; next year, they’ll get an accountant; next year, they won’t have to file an extension; next year, they’ll get caught up and then they’ll stay that way.
They hardly ever actually do. The relief of getting the taxes done is so great that they can’t bear to look at anything related any more, so they put it out of their minds. And that’s where it stays until the next deadline rolls around.
I am no exception to this trend. Many of my friends would be surprised to hear this, as I have not only my own taxes to handle but also my father’s (which are extremely complicated even with a CPA doing most of the actual work), and I have gotten all of them in the mail by April 15 every year except one. Even so, every year it has been a lot of stressful running around and checking things and updating things and notifying various people, and every year I have sworn to do better.
The thing is, to make a writer’s tax forms easy to do, you have to start early. Because what makes the taxes easy are not just lots of records, but the right records, and it is several orders of magnitude simpler to do them right from the start of the year than it is to try to re-create them later on. This applies no matter what it is you are swearing you will do better with next year.
This year, I made my life a lot easier by 1) emailing the accountant to ask about his schedule a good two weeks earlier than I usually do. This meant I didn’t need to panic two weeks later when his calendar and mine don’t match up until April 14; I already had the only available slots that worked with my calendar, and all those other people who took them last year can see him while I’m busy with other things.
2) I made a list of all the documents I needed, based on last year’s forms. When they arrived, I noted the date, and when things arrived that weren’t on the list, I added them and the date, too. This isn’t a big deal for major things like the advances and royalties that flow through my agent; those tend to come in on time, or I get a note explaining (usually in an exasperated tone) that XYZ publisher is late with their numbers again and everything will be along as soon as they arrive. What I needed to keep tabs on were the smaller things – payments for school appearances, reprints, the occasional speaking engagement. Because it isn’t enough to track these throughout the year; I need to know if the payer is going to send me a 1099, because what they report to the government is what I have to pay taxes on, and it really helps if we both have the same numbers.
The list of speaking engagements isn’t going to be exactly the same this year as it was last year, but there are other smallish income amounts that will be, or that will show up again in a year or two. Knowing whether and when to expect their forms to arrive takes a lot of the pressure off. For the rest…well, the plan is to keep a list this year of place, date and topic, and amount received. It is so much easier to write it down now…at least, it is easier in terms of making tax time less stressful. It is still a boring tedious job that I am as eager to put off as the next person, so we’ll see how that goes.
3) The third thing I did was to sit down with Quicken and my tax forms and make sure all the things I deduct will print out with nice, neat subtotals for the lines I want to put them in. Yes, Quicken and Turbo Tax are supposed to do this for you, but their idea of what sorts of things belong in which lines does not always match up with the things a writer can deduct, and it never matches up with how I want to track my expenses for my personal budget. I have sworn every year for the past ten years that I would do this, and I always end up printing out their form and then making four or five manual corrections while I’m sitting in the accountant’s office. It’s not a big deal, but it’s annoying, and it ends this year.
That makes this year’s taxes run more smoothly, especially since I have most of it done and it’s not the end of March yet. For next year…the main thing is record-keeping during the year. The majority of it has been greatly simplified by Quicken’s ability to go on and download all my bank and credit card numbers; the catch is that the agencies often don’t keep an entire year-and-four-months-worth of records on their sites, so I have to remember to do the download periodically. Once a month when I pay the bills used to work before I put everything on auto-pay; this year, I’m going to try for once a quarter when I make my estimated tax payments.
And that should do it for this year. We’ll see how well it worked, next year…
One advantage to being just a bit anal-retentive (yes, it does have a hyphen) is that everything goes into my spreadsheets, if not immediately, at least usually before the pile cascades off the edge of my desk or I forget what that receipt was for. It helps that my taxes are pretty simple — even the IRS can only pack so many complications into an income as small as mine. 😉 Which is not to say I’m not open to improvements; I started using your suggestion of envelopes for receipts last year, and it is even easier than my previous filing. (I was going to say that I actually don’t swear that I’ll do better next year, but then I realized that taunting the fates like that was a Really Bad Idea. 😉 )
I’ll still be running around at the last minute for something — there’s always something — but at least I can keep it to a bare minimum. And the forms are still tedious, and there’s new things to figure out (what to do about that comped hotel room, for example). But you are absolutely right that it is so much easier to deal with it properly throughout the year than to struggle through it all at once come April.
It also helps that the first time I had to do self-employment taxes, it was so excruciating that any contributory bad habits I had got fixed PDQ. I am never going through that again!
I almost always make the deadline, but it does take me three weeks to do the stupid things.
I keep detailed notes – and it doesn’t matter: they change SOMETHING each year.
You’re right, though, that a) the best time to make good notes is right after you finished last year’s taxes, and b) it is almost impossible to force yourself to do it then because you’re so overwhelmed and disgusted by the process. C’est la vie.
Doesn’t matter – I still end up going over every single one of our financial records in the process – and that alone is worth it. When I’m done, I know where every penny went, and sometimes even what we should be doing a little differently.
I’m glad you post about this topic, because there are a lot of people who try to bury their head in the sand and pretend like writer’s don’t have to worry about this kind of stuff.
I’m still unpublished but since things are looking promising that I might get an agent this year, I’ve already spoken with my tax guy about what I’ll need to do when I get published. I might be jumping the gun, but in my mind, it’s a whole lot easier to prepare for something before it happens, than to worry about it after the fact. Even if I don’t find an agent, and even if I don’t get published for several years down the road, at least I’ll know what to expect.