1099 As Last Resort

June, I was trying to figure out how to ask you a question on your page-but couldn't find the tab for that.

I appreciate this resource so much. I was self employed massage therapist for 11 years and now am a student RN.

My husband is a subcontractor in the construction (specifically replacing floors) field and he has a helper. His helper is not licensed like my husband is- we paid him quite a bit of money this year- he makes 25%. We never had him fill out a w-9. He is still working helping my husband. Can we still send him a 1099 and will that help protect us? He made $25,000 by helping my husband this last year.

We are going to start paying him by business check starting next week so that we have absolute accurate records of how much we pay him.

I appreciate any feedback you have.

Thank you sooooo much.
Cheniah

AK


Hi Cheniah,

Sorry my site is confusing. A new one is in the works. Was supposed to be up by Thanksgiving. Then Christmas. Switched to a different web-dev company and we are now looking at April. So please hang in there with me.

Ahem! Based on your description your husband has an employee. Doesn't matter whether he's paid by check, cash, or steak dinners. If he works for your husband using your husband's tools, on your husband's schedule, and your husband could fire him if he did a lousy job or if there were no work, and the guy doesn't work for any one else then by all appearances you do not have a sub-contractor working for you.

What to do about 2010? Well, you should set up payroll and file all the back forms and pay penalties. But, my guess it that's not on your agenda. So next best is to file a 1099 and 1096.

My next eLetter, Ways Through The Maze, due out in a few days will give you info on filing a 1099 by the 2/28 deadline.

Best,

June

1099 or not, it's income.

June --

I have been a self employed massage therapist for three yrs now and always received a 1099. Last year I started working directly with clients as well. my question is this... I received a 1099 from a company I worked for but how do I report the other cash and checks I received directly from clients since I don't have a 1099 for that??? do I just combine it with the 1099 ?

judy

Hi Judy --

Whether or not you receive a 1099, all income you earn as a massage therapist is part of your gross self-employment income.

-- June

Alert!! New Recordkeeping Burden for Indies

Hi June,

Here is a current article that I thought may be of interest to you and indies such as me. The article states that the new healthcare reform bill contains a provision that requires the issuing of a 1099 to every vendor from which you make a purchase.

Quote from the article: "But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they'll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases." Health care law's massive, hidden tax change.

This provision really annoys me. It really sounds nutty that an Indie such as myself is going to have to 1099 everyone I do business with. Is this really the case?

How can we start to prepare for this dramatic increase in paperwork? Thought this may be a good topic of discussion in one of your emails or for your blog.

Thanks for your consideration.
Elle DeeCompany: Indie Graphic Designer


Alas! Alack! 'Tis correct. What an added burden to indies.

Indies must now issue a 1099 to a corporation and thanks to the "Patient Protection and Affordable Care Act" they must also issue a 1099 for any $600 or more paid for property or services.

A 1099 was always required when $600 or more in services was paid to an independent contractor -- another indie. It was not required if you paid a corporation for services.

It appears that the IRS is trying to rein in the cash economy. I don't know how it can be implemented. To send a 1099 you must have the federal ID # of the recipient. It's difficult enough to get those #s from other indies or childcare providers, getting this info from the iMac store or Staples or your local garage sale where you bought that wonderful antique desk will be challenging if not impossible.

Keep in mind that the IRS will issue clarifying regulations. So, please. Elle, alert your colleagues. If all of us indies let our representatives know about this unenforceable burden we can have an impact.

-- June

Lorenzo Landscaper's Business

June --

I'm from Woodbridge, VA. I am a full time fireman who does side work cutting lawns. I've been doing lawns for 3 years. My brother and I who is also a fireman cut lawns together and split things 50/50. We don't have a business license or TAX EIN because we have never made enough money to claim until this year.

This year we will receive our first 1099MISC form ever and will be claiming our side income as well. When we get paid the check comes to me in my name as will the 1099 for the full amount we were paid. Is there anyway for me to claim half that total on my income taxes as other income and somehow let the IRS know my brother is claiming the other half?

I tried calling the IRS and got no where, but was told I could send my brother a 1099 from myself to make it happen is that true?

If so what are the logistics? Would we be better off filing for a tax# and doing a completely separate business return although we don't have records for any deductions?

Thanks for you time.
Herb The Fireman


Hello Herb,

First, let's go over a few things.

You said "we have never made enough money to claim." Know that no matter how much you make, you must claim it all.

The feds do not require you to have a business license nor a tax ID #. Although your town or county might.

The income that you and you brother earn is not "other income" it is self-employed income.

You each must claim the income on Schedule C: Profit or Loss From Business which is part of your personal/individual tax return.

Since the income comes to you then you should send your brother a 1099MISC for his 1/2 of the income. If you don't send him a 1099 it is not a big deal. You could be fined $50 for not filing that form. In 30 years I've yet to see that happen. You should give him his 1/2 via a check from you so that you have a record of payment. Since this is after the fact -- i.e. after 12.31.09 -- at least have some paperwork, such as an invoice from your brother marked paid, attesting to the transaction.

I do not give specific, line-by-line tax return instruction so I can't give you more "logistics."

One of the characters in my book Self-employed Tax Solutions is Lorenzo Landscaper. You might want to check out the book to see if Lorenzo's deductions give you any ideas on what yours might be.

Best,
June

Insurance Settlements Differ

Hi June,

Thank you so much for your wonderful tax tips -- Maze Archives.

I'm wondering if you might shed some light on a particular tax issue.

Last year (2009) my wife agreed to a (rather small) settlement for damages due to a physical injury caused by her work. She was also laid off as a result of this action. Yesterday, we received from this company a Form 1099-Miscellaneous Income from this company. The damages settlement was shown in Box 7-Nonemployee Compensation.

Do you have any idea regarding how this amount should be reported to the IRS on our 2009 income taxes--and even if it is taxable generally?

We would appreciate it if you could give us some direction here.

Thanks,
Jack


Dear Jack,

You need to talk with a tax pro -- H&R Block is the least expensive and is also equipped to handle this -- and have him/her read the settlement your wife agreed to.

Different kinds of settlements are taxed differently. The 1099 may be correct or may not.

Best,
June

1099 Not Necessary for the Recipient

June --

Technology Consultant. Last year I went full-time self-employed in August. I earned about 15,000 in that time frame.

How long does the company I worked for have to get me the 1099 stating I made money? They haven't sent it yet, and I'm not sure when they are sending it. I don't want to get in trouble by filing my taxes and claiming the income with no 1099 (and I wouldn't want to file the taxes and not claim the income).

Eric


Eric --

You, the recipient of the 1099, do not need to have a copy of your 1099. It is not sent to the government with your tax return as is the W-2. Just be sure to claim all the income you made. Here's more info 1099s W2s W4s W9s . Never-sent and erroneous 1099s are the reason I encourage indies to keep a record of income. I explain how in my petite publication The Confident Indie: Five Easy Steps.

-- June

1099-MISC is a requirement.

Hi June,

I am a self-employed web designer from PA.

I've been "indie" for 6 or so years and up until now, have never been asked to fill out a w-9 form and frankly, don't like sending my social security number to my (house painter)client, who will then give it so some accountant.

The client just emailed me and said his accountant wanted me to fill it out to be on "record". This is for a job that I completed 6-8 months ago and was paid for in full by his business check (a little over $700) made out to my name, as i have no business identity. I will pay income tax on what i made from him - and i don't understand why he can't write off my expense as a advertisement expense.

So do i have to give these people my social security number? And what are they going to do with it?

thanks for any info you could provide!

Amy
PA


Hello Amy,

Your painter client is correct and so is his accountant. You were supposed to have been receiving 1099s for "the last 6 or so years." 1099s W2s W4s W9s

Anyone who hires you is supposed to give you a W-9 to fill out so that he may have your name, address and social security # in order to send you a 1099-MISC a year-end.

Whether you are paid in cash or check or chickens if it's $600 or more you are supposed to receive a 1099-MISC.

Not wanting to give your social security # to someone for whom you work could be construed as paranoia or careful business practice.

If it's paranoia: Get over it. If it's careful business practice get a federal ID # and use that # instead of your social security #. EIN-employer identification #

Read all the posts in the links above and you will feel much better because you will understand that this is a required by the IRS.

-- June

More Truth About Income

June --

Here's one for you! I do self employed consulting work in Ashland, Oregon, and have done so for several years. I have an LLC client who is paying me with state tax credits. They are a direct deduction in state taxes due, as good as cash to me. The question is: do they need to send me a 1099? Do I need to pay self employment tax on the value of these as if they were cash? I'm guessing yes, but not sure this small LLC knows that!

Many thanks for any help, Jeff


Jeff --

Your guess is correct. Yes it is self-employed income to you.

Yes, if the value is $600 or more, the LLC should send you a 1099-MISC.

And, yes, it is income to you even if you do not receive a 1099. Read An Inconvenient Truth: It's income. below.

-- June

An Inconvenient Truth: It's income.

June --

I am a Freelance Violinist and Violin Teacher.

Does the rule of not factoring the first $600 of the income from a given "employer" apply to self-employed people?

For example, if I teach a student and had only $599 income from him during a year do I factor that money in anyway?

I realize you've mentioned that indies do not have "employers" but I noticed some of the contractors I played for in recent years did not send me 1099 if the combined income from the gigs did not exceed $600. I would really appreciate clarification in this matter!

Great blog - very helpful.

Unfortunately makes me realize how little I know about the taxes I should be paying... Dominika
Houston, TX


Hello Dominika,

I assume "factoring" is your euphemism for "should I include it as income?

Yes, you should. Any money -- in any form -- that you receive for services performed is income. Intentionally not including income is fraud.

Your students are not your employers. They are your clients or customers to whom you sell your services. If you taught in a school and received a salary from the school, then the school would be your employer.

Anyone who pays an indie $600 or more is supposed to send the indie a 1099-MISC stating the amount of money paid. A lot of people neglect to send any 1099s.

If because your income is under $600 a client doesn't send you a 1099 it is still income. Think of it this way: If you had 100 clients, all of whom paid you $599, you would have earned $59,900. Would you claim zero income?

Dominika, you really need information. I suggest you read these posts 1099s W2s W4s W9s.

You might want to pass on what you learn to alert your fellow musicians. Bands and many music groups tend to get paid in cash and then pay the musicians in cash. The leader then doesn't know or forgets to send 1099s. The band members then conveniently forget that they are supposed to include the cash as income.The inconvenient truth is that all income must be claimed on your tax return.

You can offset that inconvenience by knowing more about legitimate deductions. Check out my book at the library or buy it at a sale price here: Self-employed Tax Solutions . It will give you a basic understanding of indie taxes. It is written like my blog -- which you say you like, THANKS! -- in a clear easy-to-understand style. Educate yourself. You'll feel good about it. It will give you indie-business confidence.

Cheers,
June

1099 Basics

June --

If I pay out referral fees of $200.00 per person and it totals over $1,000 per year, do I need to 1099 those people?

Thanks,
Mary


Mary --

1099-MISC reports nonemployee compensation -- that is, what you pay to indies who work for you.

Whether or not a 1099 is required is based on what you pay to each person. If you pay an indie $600 or more then you must file a 1099-MISC for that indie.

It is not based on the total you pay to all indies who work for you.

-- June

Artist Tax Problems

Hello Ms. Walker,

Me and my husband are self-employed artists.

The question that I have for you doesn't really belong to the self employed category, though. Here it is: I have a trust that sends me 1099's. This year, the 1099B said that my proceeds from an exchange,(a trust merger) gave me a net proceed of 80,000.

When I plugged this number into TurboTax, there wasn't any spot for "exchange", so I listed it as a "sale": it said I would owe $5000! Did I do this right? Are exchanges "sales"? I'm just not sure if I'm doing this right, and, ironically, I don't have the money to pay an accountant. I'm an artist, I do my own taxes, I get $300 a month from the trust, and I made $0 in 2007 (I moved to Mexico, where I can live more cheaply). I

I know this is totally not what your site is about, so thank you for listening. It's hard in Mexico to find someone face to face who knows about US taxes. If you have any other site/person to send me to, please please do so! I've been trying to read as much as I can online to figure it out.

Best wishes from Baja California Sur


Hello Baja California,

Your dilemma is not unique to you. Many artists have tax questions about the non-indie part of life and don't have the resources to hire a tax pro.

Here's a little general tax info about income statements received at year end from different sources:

An employee must get a W-2.
A self-employed may receive a 1099-MISC.
An investor with interest or dividend income receives a 1099-INT or 1099 -DIV.
An investor who sells a stock or other product receives a 1099-B.
A partner in a partnership receives a K-1.
A trust beneficiary [one who receives money from the trust] receives a K-1.

Your first step should be to go the source. By the source I mean the accountant who prepares the trust tax return. Unless yours is an unusual situation, you should not be receiving 1099s from the trust. You should receive a K-1.

You don't say what kind of artist you are but for my purpose I'll think of you as an accomplished watercolorist. Just as putting a paintbrush into the hand of your neighbor doesn't make him a skilled painter, nor does putting you at the keyboard of TurboTax make you proficient or even skillful in taxes. Over and over in my writing I warn about the inexperienced using tax programs.

A 1099-B is sent when there is a sale. If you receive a 1099-B showing a sale of $2,000 you might have a gain or you might have a loss. If you bought the stock for $500 you would have a $1,500 gain. If you bought the stock for $3,000 you would have a $1,000 loss.

An exchange is just that, one thing is exchanged for another. In your case maybe one trust for another trust. For instance if a $50,000 trust is exchanged for a different $50,000 trust there is no gain nor loss. Thats's why you need to call whoever is handling the trust. If you get no help there call the IRS directly at 800.829-1040. [The # may differ when calling from Mexico. If it is, please let me know.] Don't be afraid of contacting the IRS. The new IRS is friendly and often helpful. Don't use a tax program for this situation.

Best,
June

Incorrect 1099

June --

Three years as graphic designer. A client sent me a 1099 with $19324 in field #7. But I provided my services for a fixed $1500/month rate. This 2007 I received 24 checks (every 2 weeks for $750 each) but he told me he counted more and that he would double check. That was like 3 weeks ago and he hasn't respond my emails since that. I stopped working for him last December and I would like to know what I can do. If he doesn't correct that 1099 I will end up paying more taxes for the almost $1500 I never got.

Thanks!
Javier from Los Angeles, CA

Hello Javier,

Paid every two weeks ... sounds to me like wages not self-employed income.

Also every two weeks means 26 payments per year. Twice a month would be 24 payments. So the first thing to do is check your records.

If you are right and the client is wrong, then send a letter, return receipt requested. Tell the client you will include a copy of your letter and the incorrect 1099 with your tax return. That should get his attention. If not, then on your tax return include as income only the amount you received.

The hitch here: As I said, the method of payment sounds like wages so be sure you can substantiate your self-employed status.

-- June

What's the difference between a W2 and a 1099?

Joe an electrical designer from Ridley Park, PA asked:
When I become a sub-contractor how many exemptions can I claim on my W-2. I was told 4 was a good number since I will receive more take home pay and then make mileage, etc. deductions from my income tax return.


Well, Joe, sub-contractors -- also known as self-employeds, indies, solos, freelancers -- do not have anything to do with W2s.

When an employee is hired he fills out a W4 in which states whether he is married or single and how many exemptions he will take. At year-end the employee must receive a W2 from his employer. A W2 states wages earned and taxes withheld. Bad things happen if an employer does not provide a W2.

A self-employed may be asked to fill out a W9 when he starts a project for someone. On the W9 the indie gives his name, address and social security number or his employer identification number. If the indie is paid $600 or more by an individual or a company, that individual or company should send a Form 1099-MISC to the self-employed. A 1099-MISC states self-employed income earned. Even if there's no 1099 the self-employed must report the income on his tax return -- no matter the amount. Nothing horrendous happens if a 1099-MISC is not sent to the indie.

Read these posts on employee vs self-employed for more info.

And, of course, for a complete explanation of employee vs self-employed be sure to check out the book that can simplify your tax and financial life, and save you money! Self-employed Tax Solutions.

Making a payment to someone? Plan ahead

Hi June,

I have a quick question. I own a rental property here in San Francisco and I had a tenant who I paid off to leave the building. I paid her $20,000. I would like to write it off but the tenant refused to fill out the W-9 form. I have her new address but not her social security number. What are my options?

Rusilla


Hello Rusilla,

An overview before I answer: Whatever an indie pays someone in the course of business is a deductible business expense. And, that someone must claim the income regardless of amount received. If any individual is paid $600 or more the indie must file a Form 1099 stating the amount paid to the individual . The Form 1099 is sent to the government and to the individual.

What you are supposed to do before you pay anyone is have him or her complete a Form W-9. This provides you with the person's legal name, address and social security number. All this info is needed when you file a Form 1099.

Rusilla, you didn't do this.

Step #1: The IRS says that if someone refuses to give you the necessary info you should withhold 28% from the payment and send the withheld money it to the feds. In other words you are responsible for withholding and paying the tax of the individual you paid. Of course, since you already paid the vacating tenant that can't be done.

Here's steps 2, 3, 4, and 5.

#2: Send a letter to the tenant with a request for info. Let her know that failure to provide you with the info will cost her a $50 penalty. [Big incentive. Right?] Include a W-9 with your letter.
Keep a copy for your records. IRS suggests that you get some kind of postal receipt acknowledging delivery.

#3: If you get no response, repeat Step #2.

#4: File the Form 1099 with no social security # for the tenant.

#5: You'll get a notice from the IRS about why there's no SS#. You explain and include copies of your letters to the tenant.

You may still use the $20,000 payment as a cost of business. There is no need to forfeit such a cost but you must follow the above procedure.

For all my readers: Learn from Rusilla's error. Get the info upfront.

Best,
June

A kind of reimbursement

June --

I am getting ready to split a commission with an ex partner. The commission is about $2000. If I turn around and write her a check for half, how much tax will I be responsible for come April?

Jill from Toms River, NJ


Jill --

At the end of 2007 you will need to prepare a Form 1099-MISC stating the amount you paid to your ex-partner. That form gets sent to the government and your partner.

The amount paid the partner will be a business deduction. On your tax return the total received will be part of your gross income. You subtract as a business expense the amount paid your partner. That will leave you with net income. You will pay tax on your net income, that means, on your 1/2 of the payment.

-- June

Reimbursed expenses included on 1099

June--

My husband works in trucking and he is being reimbursed for his tolls. It is on his 1099 so it's considered as income. Why? And how do we put this on our taxes?

Thanks, Tracy


Tracy,

Here's what I wrote about this for my website: Expense Reimbursements Included on Form 1099 .

Please let me know if you need more info.

Best,
June

A 1099 Overview

June,

When is a 1099 necessary? How much money would I have to pay before I have to claim (tax) my subcontracted work?

Thanks.
Ryan, Graphic artist in Salt Lake City, UT


Hello Ryan,

So many people are confused about 1099s. Here's a quick summary.

At year-end employees must be sent a W-2 from their employer. A W-2 states wages earned.

At year-end, if a self-employed were paid $600 or more by an individual or a company, that individual or company should send a Form 1099-MISC to the self-employed. A 1099-MISC states self-employed income earned.

However, many times no 1099s are sent. Even if there's no 1099 the self-employed must report the income on his tax return -- no matter the amount.

Whether or not a self-employed will have a tax liability on his self-employed income depends on how much he has in expenses. And it also depends on all the other income and deductions on his tax return. Here's a couple columns from my website that give more explanation on which taxes you may have.
Taxes: Which ones and how much do I pay?
Estimated Tax:How much should I pay?

Keep in mind. there is a full explanation of income, expenses and taxes in my book, Self-employed Tax Solutions.

Best regards,
June

Missing 1099

June,

What do I do if I have everything except one 1099 form from a client who is dragging their feet?

Claudia
Graphic Artist, Morongo Valley, CA

Dear Claudia,

You don't need the 1099 as long as you include the income on your tax return.

June

Full-time Job and Freelancer: W-2 and 1099

Hi June,

My question is this. I have a full time job as a graphic designer and also do freelance on the side. I take a standard deduction on my W-2 form. As far as my freelance, I get 1099 forms for each company I work for each year. Can I take a standard deduction on my W-2 and still claim expenses against my 1099 forms?


Hello Joseph,

Your situation is typical of many graphic designers -- you have a job and you also freelance. And, your question is a designer's typical question in that it is more complicated than you realize.

Let's look at a few definitions. You receive a W-2 at year-end stating income earned when you have a salaried or wage payng job. When you freelance you get a 1099-MISC staying income earned.

Your tax return is filed on a Form 1040. You take a standard deduction on the 1040 instead of itemizing expenses like: medical costs; mortgage interest; real estate taxes; charitable contributions; and business expenses that you against your W-2 job.

A standard deduction has nothing to do with business expenses that you have against freelance income. Those kind of expenses go on a different part of your tax return. You can take the standard deduction and deduct all freelance business expenses.

Here's some more info from my website on this topic:
What'll it cost me to leave my W-2 job for the indie life?
You say you’re self-employed —Will the IRS? Let's first look at W-2 vs. 1099

And, as always, read the book that can simplify your tax and financial life, AND save you money!SELF-EMPLOYED TAX SOLUTIONS .

Designers Dozen: Tax Saving Tips for the Graphic Artist

Take notice all you unique visual designers – whether you use Dreamweaver or Six Apart or Oil on Canvas; whether your income is $2,000 a year or $200,000 a year; whether you receive a 1099 or not: The IRS applies the same rules and regs to all of you.

That’s right, unique carries no weight with the IRS. You all must follow the same rules.

Here are some time and money-saving tips -- a Designers Dozen -- on how to simplify those complex rules to fit your unique situation. All stem from questions you have asked me or areas I know you need help in.

1. Use two offices. Forget the old husband’s tale that home office or studio is an audit red flag. The IRS has lightened up on this. Even if you work out of two or three places, if used exclusively for your work they are all legitimate deductions. Yes, both your home studio and the spare room at the beach rental where you do your three-hour morning blogging routine are deductible business expenses.

2. Work at home to increase your business transportation deduction. If you freelance at someone else’s studio you can still deduct costs for the area of your home used exclusively and regularly for your business – no matter how small the area. And by having two work places you’ll increase your deduction for auto use or public transportation costs.

Here’s why: The IRS does not allow a deduction for commuting from home to work and back. But it does allow a deduction for getting from one workplace to another. If you work in your home studio and then drive to your other studio you are now driving “from one workplace to another.” You’ve increased your business miles and the amount of your auto deduction, or made your subway trip a business expense.

This also applies to something like attending the Boston Flash Forward Conference. Creative Bostonians without a home office would not get to deduct the “T “ cost from their home to the conference.

3. Careful, no office sharing allowed. Keep in mind the all-important IRS exclusive use rule: that your office must be yours and yours only. If you’re the designer for Clyde Client and your wife handles the tech side of Clyde’s site and both you and your wife use the same office – sorry, no deduction. The way around that: make one spouse the employee of the other. BTW – there are a whole lot more benefits to hiring your spouse.

4. Hire your spouse. Even if your honey only helps you out with printer jams or errand running, pay him for it. Putting him on your payroll opens up a vast array of deductions. You can provide generous employee benefits and deduct the costs of those benefits from your design income. What kind of benefits? Well, for one thing, you can give him a medical plan that covers his family – that’s you and the kids. That would make your trip to the doctor a deductible business expense.

5. The more broadly defined your business the more deductions you can take. If you sell Web page templates for MySpace, Blogger and Moveable Type via your blog, and also generate AdSense income from the blog, and also consult on how to promote through blogging, you need to think of all that as one business. Give your work an expansive general description, like consultant to the virtual universe. Claim all the income --- every dime. Consider as a possible business expense everything you do that makes you better at making money.

6. Keep it simple. By taking the broadest possible view of all your income generating ventures you can group them as a single enterprise and thereby can really simplify your recordkeeping. But don’t stretch it beyond reasonable limits. A single business that combines dog walking and web design is just too far fetched. But that combination might very well stand up if you design only for pet stores and pet services.

7. Why do you watch TV, rent DVDs, see a movie? If it’s just for fun, no tax deduction. However, if seeing the visual art of others is vital to your own creativity, keeps you abreast of current design trends, or clues you in to the latest fashion, then consider the costs a tax deduction.

8. TV for research. Has the artistic void on network TV forced you to get cable? Well then, part of your monthly cable cost is a business deduction. And remember, the business use portion of the cost of your TV and DVD player is also a business expense.

9. Are you allowed to deduct a gift basket of fruit to Grandma? Of course you are -- if Gram has some connection to your business. Did she show you how to hook up your scanner? Make curtains for your office?

You’re an indie business and even though you may have a personal relationship with someone, that does not rule out also having a business relationship. This is particularly pertinent in gift-giving. Of course, if you bought your client a basket of fruit as a birthday present you would treat it as a business gift deduction. But what about the friends with whom you have a business connection? If dinner at a friend’s house was planned so that she could help you with your Webby’s submission, then the chocolate you arrived with is a business gift.

Of course, all the costs related to your Webby’s submission are business expenses. And when you’re the winner and head to the awards event this spring, well, your travel expenses are also deductible.

10. Deduct your laundry and dry-cleaning. Spill ink or red wine on your white silk blouse while attending an awards event? Dry cleaning and laundry while on a business trip are deductible expenses. You may also deduct the costs of the first dry cleaning bill after you return home.

But don’t get too creative and save all your winter’s dirty clothes for cleaning the day after you return from a 3-day workshop.

11. Just starting out? Final Cut Pro and Adobe After Effects not bringing in the bucks yet? No problem. Even if you haven’t yet made your first dollar as a graphic designer you may still deduct your expenses. As long as your goal is to make money, you’re in business – whether you actually make any money or not.

12. Invite the public! If your Grand Opening or gallery show is open to the public you may deduct the entire cost of food and liquor served. If it is for invited guests only, you may deduct only 50% of your costs. Note, it doesn’t matter how many people actually attend the function.

13. Discuss these ideas with your tax pro before incorporating them into your business. That’s the most important tip of all. If your tax pro isn’t aware of them … time to get a new pro!

Be sure to take a look at my 2009 money saving offer for visual artists. It 's right here.
-- June