The other day I got the first of a series of 1099 tax forms in the mail and it served as a reminder that it is now the change of the year and time to get all my ducks in a row.
If you work as a freelancer, independent contractor or are otherwise self employed, the best thing you can do is keep track of everything as it happens so you can have it for quick and easy reference when the next tax season comes around. Whether you file yourself or use the help of an accountant, making detailed logs and keeping receipts along the way is very helpful as you may have multiple sources of income to add together and extra deductions (if self employed) to take advantage of. So, if you’re struggling to keep organized, this is what I do…
1. Start a binder with 4-5 tabs
- Bank Statements
- Income List
- Work (this is where contracts, W-2s, check stubs, 1099s, and other tax forms go)
- Business Name (if you run a business in addition to freelancing)
- I like to Use the clear covered presentation binders and put a copy of the filed tax form/return in the front later on for quick reference.
2. Print Mileage Sheets
- Mileage sheets should stay in your car until the end of the year since that’s where you’re using them. At the end of the year, put them in your binder.
- Starting on January 1st, keep track of:
- every trip you make (date, vehicle used, start and end mileage, and other relevant information like where to, why, were you paid mileage or not, etc)
- every time to you get gas (date, mileage, location, gallons, total price)
- every time you get an oil change or other regular car maintenance (date, mileage, price, etc)
- Keep the receipts in an envelope with your logs
- Miles driven for work that are not compensated for by your employer/contractor can be deducted at the end of the year, as can your oil changes in your “primary” work vehicle
- if you use a tax accountant, you might do them the favor of highlighting the work trips for them
3. Keep a list of paid work with all the information you might need:
- date the check was received
- pay-roll company (note that this is not necessarily the name of the hiring company but this is the name you will look for on your check stub and the one that will show on your tax forms when you look to see who all you need one from)
- job position and project/company (ie. Production Assistant – “Children of the Corn” film)
- Gross Pay
- Pay after tax
- I have these two different payment columns because some people will deduct the taxes from your check and some will not it just depends on what kind of job it is, how much you’re paid, and if the employer is a company or an individual etc.
- if they don’t automatically deduct taxes for you, you may need to set a percentage aside to have when taxes are due
- Check number (this is for quick easy reference if a check gets lost by you or the bank and needs looked into. This has happened to me and it’s a pain!)
- This list should stay in your binder at all times and should be updated BEFORE depositing anything in the bank lest you forget any information
Of all of those tools, the one I find most helpful is the income tracking sheet. At the end of twelve months I can hardly remember what all I worked on that year let alone how many 1090s I’ll have to wait on before filing my taxes. This year it’s 9 (although I had 13+ different contracts) some of which use the same payroll company so I’ll have to add up how much I got from each of those projects (using the information from this list) to figure out which one goes with which job. But thanks to this system I know exactly what to expect and exactly when I’ll have all the necessary information to file taxes.
Did you find this helpful? What do you do to help keep track before tax season? Please share in the comments below.