Tuesday, February 5, 2008

Got People? Not Likely

Taxes are daunting. Especially when you're an artist, freelancer, or any other category that doesn't place you square under the one-employer rubric. So, most people I know get help with their taxes...and believe me, this help can result in the savings of hundreds and even thousands of dollars.

So, in 2005, when I went to do my taxes, I went to H&R block...I thought that my situation was relatively simple: a full-time job, and a few freelance projects. 

Fast forward a year, and the IRS is sending me scary letters, saying I owe thousands in back taxes.

Oh, and their must-vaunted protection up to $5,000? Sure, if you buy it. Plus, be sure to keep your receipt...they won't honor their commitment without it; apparently H&R Block doesn't keep those records.  

Insult to injury: whatever funds they then pay out to you? Become tax liabilites for you. I.e., they write you a check to cover the $1,000 you suddenly owe the IRS, you now must declare that on your current fiscal year taxes. Paying taxes on paying taxes...awesome.

My advice, steer clear of H&R block and find a reputable accountant. When I did, it even cost me less to have my taxes prepared. Freelance weirdness and all.  

I think it's especially important for artists to be aware of this, as the system is not set up for the self-employed. Consider setting yourself up as a corporation. As a corporation, you get benefits not accorded to private citizens.

...and we still think our country is a democracy? Protect yourself, the government won't.


Mark Creegan said...

Oh jeez! I am so sorry you are going thru that! I hope it turns out okay. And you make a good point about artists and finances, in fact there is a new blog about that very same idea. check it out!

Hope to c u at the show tonite. Your pieces freakin blew me away!!!

madeleine said...

So glad you liked them.

And thanks for the link...the system really isn't set up for individuals.

As for the show, I am sick as all hell. I hope it goes well though!

kelly said...

For some reason, it slipped my mind and I didn't make the connection until just now (after double checking), that the work I saw tonight at OPAQ is yours. Your pieces were my favorite.

Switching trains of thought, for my economics class we had to read a book by a self-made millionaire. Apparently, once you're your own corporation, lots of little things suddenly become business expenses. Such as vacations--are they vacations or business trips? Legal paradoxes throw me into a tail spin. Quite often.

madeleine said...

Kelly, you're right. Though I'm not a corporation, my b-friend is, and all of his travel expenses he deducts. Also, I used to work for an architect who expensed everything, and now, my current boss does too. Things like: if she buys lunch, it is an expense because we sit there talking about work.

Its really crazy how all this information is out there, yet hard to consolidate.

And thank you for the compliment!