What every new freelance court reporter should know about being self-employed and paying taxes begins with investing in good expense tracking software. From there, reporters should begin keeping . . .
- a good record of everything you purchase to do your job. This includes: paper clips, pens, exhibit stickers, ink, steno and transcript paper, transcript covers, steno machines, computers, printers, ink cartridges, staples/staplers, envelopes, stamps, FedEx/UPS/USPS expenses, et cetera
- a log of the miles traveled on your car
- all automobile maintenance records
- all parking, bus and subway receipts
- cell phone bills
- a record of any notary public fees and expenses and when they will expire
If you have set up an area of your home as your “home office,” track . . .
- your electricity, water, heat, and trash removal expenses
- any repairs made on your home
- your rent/mortgage payments.
Set aside 30 percent of every paycheck so that you will be able to file quarterly estimated tax returns. When calculating how much you will have to pay, determine what percentage of your cell phone and car is utilized in the performance of your job, as you will be able to deduct that figure from your estimated taxes. Before deducting that portion of your mortgage attributable to your home office, you will want to review the tax implications associated with selling a home that is used partially for business. Even if you are not clearing a substantial sum after expenses, file your quarterly estimated tax returns, because failure to file can result in a substantial penalty.
Starting off on the right foot with the IRS from the outset is important, as you are now officially a self-employed professional. If you find you won’t be able to get your tax returns together in time for one reason or another, file for an extension, but don’t ever skip a filing. This blog is not meant as an all-inclusive guide to filing tax returns, but as merely a Quick-Start Guide for new freelancers. Reporters will want to consult their tax preparer/accountant for more information.