Avoiding Tax Time Stress


by Miata Edoga

Don't taxes stink?

While I love the promise of a new year, the threat of an upcoming tax season is absolutely exhausting! I think we creatives have it doubly bad; we work from the energy of bending rules and pushing boundaries. There are no bendable boundaries or rules with the IRS. Instead, it's a simple game: do it right, the first time, on time, and you win. Everything else is unacceptable.

I tensed up writing that!

So, my goal at tax time is to control the amount of time and energy I have to spend on this task. If I can get my taxes filed and paid quickly and accurately, that's about the biggest win I can imagine.

How do I do it? I'll share with you some secrets that hopefully will make your tax season a little less stressful so you can focus on your art and not on April 15th.

1)    Set a basket near the door. When tax related mail arrives, put it in the basket immediately. You don't need to open it now. It's only important to not have to search for documents when you need them later.

2)    Gather mileage records. If you drive for your art, make sure the 'I's' are dotted and 'T's' are crossed. Mileage charts aren't important when you file, but you'll have to prove every mile in an audit, so use the same procedure you learned in elementary school: Who did you go see, What was your odometer when you began and finished the trip, Where was it--how many miles away, Why did you go in the first place, and finally How did you get there--if you deviated for personal reasons, you can't count those miles. Only miles to and from your primary place of business count. Keep a log in your car and practice writing in it EVERY time you travel on business. I've been told there are also mileage apps, although I've never used one.

3)    Interview tax advisors now. If it's over your head, don't wait until the last minute to find a good tax person. Interview in the next week before tax people are completely swamped. Ask about how long they've been doing taxes (it should be more than five years, but preferably more than ten), what their credentials include, and some referrals. In fact, if possible, find another friend with a similar situation and ask who they use rather than checking in the phone book on online.

4)    Set up a business checking account that's separate from your home account.
Do you use your home account for your art? As you grow your business, you'll want to avoid this practice. Take your art seriously and keep everything separate if possible. That way you'll be able to easily review bank statements and debit card expenses to deduct from your tax bill.

5)    If you're making money, consider spending some of it on a bookkeeper. I know...this is an expense that can be avoided...but if you're serious about what you do well, you should focus on that area of your life and hand over tasks that aren't your specialty to other people. Use the time you save on taxes to earn that money and more from projects. I promise you won't regret it if you spend the time you save wisely.

If you follow those five tips, tax time this year (and every year) should flow smoothly. This approach helps you avoid the portion of tax time that make me groan: digging for records, piecing together mileage records, highlighting business expenses in my personal checkbook....all easily avoided with the right systems.

© 2013 Abundance Bound, Inc.

Abundance Bound was created to support actors, artists and creative professionals in the development of financial stability and independence. To learn how to begin the journey towards prosperity, register for the free resources available at www.AbundanceBound.com

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