Is taxes for writers sssexy?
September 12th, 2011 → 3:01 pm @ Carol
Author Delaney Diamond interviewed me at her website with this opening line…
SPECIAL GUEST Carol Topp, CPA Makes Taxes SSSexy!
Time to pay our quarterly taxes!!
Now that I have your attention, I have to admit, it’s really hard to make taxes sexy. But if anyone can do it, it’s my special guest, Carol Topp, CPA.
The interview has plenty of tax tips.
Please explain what a CPA is and does.
The C is for Certified meaning I passed a grueling two day exam. Think of it as compressing four years of college into two days! The P is for public, meaning I serve clients from the general public rather than work for a company and finally the A is for accounting which means I help business owners and nonprofits understand their business by looking at their finances.
You’re also a public speaker. How long are your workshops and can they be tailored to the needs of a specific group?
I’m pretty flexible. I’ve done 15 minute radio interviews to 2 hour workshops. I once had to compress a 60 minute talk into 25 minutes because the previous speaker went over and we could smell our lunch cooking! Don’t run long into the lunchtime! I have also changed up my topic based on what the audience needed to hear. I was asked to address unemployed professionals and I ended up showing them via cartoons how a tax return is assembled.
How often should independent contractors do their taxes each year?
About once every quarter since the IRS expects to be paid quarterly as the year goes along. Making estimated quarterly payments to the IRS depends on the amount of income you earn (and therefore the amount of tax you’ll owe); some of my clients have micro businesses and get by with just doing their taxes once a year.
What makes taxes for writers unique when compared to other independent contractors?
Writers may be dealing with inventory and sales tax if they are selling their own books. There are also special tax deductions for writers. Not a line item on the tax return, but it has to do with when you can deduct research expenses.
To avoid headaches during tax prep time, what information should clients keep track of and have ready when they come to see you?
Keep records of all income, including any Form 1099MISC you receive and all expenses including mileage and business use of the home expenses (mortgage interest, utilities, major repairs, etc). I have a Tax Return checklist and small business expense form on my website at TaxesForWriters.com under the Resources tab.
Are you able to work with clients out of your home state of Ohio? What’s the process?
I recommend a small business owner use a local CPA for tax preparation, but I offer a tax return review service during the off season (May to December). I can review and explain your return to you and discuss any changes that may need to be made.
I also do small business consultations over the phone. A writer can email me (Carol@TaxesForWriters) and we set up a mutually agreeable time to discuss his or her business and go over any concerns. We can accomplish a lot in an hour and I pro-rate for partial hours.
What erroneous piece(s) of information about taxes do you often hear repeated and what is the truth?
That if TurboTax allowed it, you’re OK! TurboTax is a garbage-in-garbage-out software program. If you put something on the wrong line of the tax return , it doesn’t know. If you include income that might not be taxable, TurboTax doesn’t know. If you missed taking a tax deduction, it doesn’t know.
I was told by an author that the home office deduction had been eliminated by the IRS (not true!), but it turned out that some fluke in TurboTax had not allowed it on her return. It was probably a box that didn’t get checked or something.
Please share three tips you think every writer should know.
- The IRS can go back three years and do an audit, so have your self-prepared tax return checked by a CPA (not just a storefront tax preparer) at least every three years.
- If you have inventory, count it at the end of the year.
- Keep track of mileage. Estimates and guesses are not allowed and this is a deduction that is usually under reported for lack of good records.
Share anything else you think will be helpful.
You are in business and should get professional assistance with your tax return. Focus on what you do best, writing and selling your book, and let the tax professionals do what they do best—prepare tax returns.
For the full interview, visit DelaneyDiamond.com
