Taxes For Freelance Writers: A Manual For Beginners

If you are starting out as a freelance writer you need to know a bit about taxes.

If you are writing by yourself and you making less than $600 per year you do not have to report this on your taxes. The first year that you conduct freelance writing you may not have to pay self-employment fees, but if you plan on making freelance writing a regular career choice which you will do more than just one year in length, you will have to state self-employment.

  • If you file personal taxes as a freelance writer, you will have to file them as a self-employed person. If you earn more than $600 from specific clients, clients who are official businesses, chances are they will send you a 1099 form. There are different letters associated with this form to dictate different types of work. If you were hired as a contractor, a ghost writer, or a freelance writer of any variety you should receive one of these forms from your clients. If you did not earn more than $600 from a business, they will not send you this form. If you conducted work online and received payments through a third-party payment system such as PayPal or payoneer you should be cognizant of the amount and the number of transactions. If you received more than 200 deposits in one year, or your number of deposits added up to more than $20,000 in one year, you will receive a unique 1099 form which will also be filed with the IRS on your behalf. This income will be subject to self-employment tax.
  • If you do not want to pay self-employment tax one of the best things you can do for yourself is to start an LLC. You, as an individual can start a business under which you operate as a writer. If you start a business you have to pay registration fees with the state where you are located. You can choose to register your business in any of the 50 states, it doesn't have to be to state where you live. If you sign up as an LLC you protect your personal income and personal assets from anything such as wrongdoing. If you are self-employed and a client sues you they can take all of your personal assets as part of the settlement. But if you sign up as an LLC you not only get more lenient tax laws but you also protect your personal assets from being taken.