A Reporter's Confusion

There are so many elements to SV's email below that I am going to embed my responses as an aid to clarity. Her confusion is not unique, so my explanation may help a lot of you.


Hi June,

I'm a full-time reporter and just started freelancing this year.

I received a 1099-MISC and am confused about whether I should enter that in a Schedule C or just along with my total income? This tells me that SV is preparing her own return and I don't give specific tax preparation instruction. So I am going to rephrase her question. Think of it this way: I am freelancing. I received a 1099-MISC that stated the amount of my freelancing income. Is that income the same as my wages as a reporter and if it is may I combine it with my wages income? Or is it self-employed income to be treated as self-employed income on my tax return? Well, asked this way, it's a little more clear that the income is self-employed income not wages and must be treated as such on SV's tax return.

It seems that's for a sole proprietorship, not a proprietor. Self-employed income makes you a sole proprietor -- fait accompli.

but according to you a 1099-MISC is for an employee, I never said that. Check your sources.

By the way, a reporter always thrice checks sources. I know because my husband was a reporter for a long, long time. And, as reporters know: Don't let what you want to be the outcome of the story influence how you investigate your story. You may think the guy's a crook but you must investigate to see all sides of the situation. You don't want to pay more in taxes but you must look at the possibility that you may and not interpret to fit your desired outcome.

I was originally working with Turbo Tax You are doing exactly what Timothy Geithner our treasury Secretary did. He didn't know his self-employed income was self-employed income and so he answered the TurboTax question incorrectly. Read these posts Turbo Tax and Tax Prep Programs (8) .

but got a queasy feeling that something was just not quite right about the fact that one way I was asked to pay several hundred dollars, and the other way I was given a refund of a few hundred dollars. On your wages as a reporter you have already paid social security and Medicare tax. You have not paid those taxes on your freelance income. Combined -- called self-employment tax -- they are approximately 15% of your net self-employed income. That's why you owe taxes.

I don't want to get in trouble but I can't afford an expensive tax preparer, especially if I will be paying several hundred dollars in taxes (and yes, I put enough aside but I feel as though if I were more savvy I would probably would not be paying as much...) I believe I should have deductions for clothing, makeup, car use and home office, but I'm not sure where to put that. It seems most tax preparers are not well-versed in helping people in my situation. You need to educate yourself. As a reporter you wouldn't write a story knowing nothing about the subject. You know nothing about the business side of being self-employed and so you should not expect to be able to write about it -- doing your own tax return. Start by reading more of my blog posts. For instance, you'll see in the explanation of expenses that you cannot deduct makeup unless it were purchased for a business special event only. For a basic understanding of self-employed taxes and recordkeeping check out my book Self-employed Tax Solutions. In it there's Rick Reporter. Rick has both wages as a reporter and freelance income, just as you do.

Do you know of a good "indie" accountant in the DC/Maryland area? No one. These posts might help tax pros - tax prep fees - tax returns .

Thanks so much!
SV
Largo, MD

You are welcome.
June