It’s an interesting afternoon here at casa de…my house. It’s my first tax day as a freelance editor.
One of the things that surprises many people about being self-employed is that tax day comes four times a year. There are a few reasons for this. The first is that, as a self-employed person, your tax burden is higher than your basic employee. Since there’s no employer withholding your taxes for you, you have to do it yourself. And since there’s no employer paying half of your social security burden for you, you have to pay that yourself as well. In all, you can expect about 30 percent of any paychecks you get from companies to go directly to the government…via your savings account.
And it’s that “via your savings account” part where people get in trouble. It’s just so easy to look at a check for $1,000 and see $1,000…not the $700 that is actually yours. Yes, this is reason number two why tax day comes four times a year for self-employed people. With a national savings rate of somewhere between 6 percent and -3.9 percent, it’s not hard to see why someone at our government would be skeptical that you could maintain a 30 percent savings rate for a full year and then happily fork it all over next April.
As noted by a friend of mine earlier today, I am certainly “fucking lucky” to be working at home, doing what I love, and paying the rent by doing it. On the other hand – is today tax day for you? Regardless, if you are a self-employed person or you do some freelance work on the side, please, talk to an accountant and get your shit together. Failing an accountant’s advice, at least read this guide to money for writers by John Scalzi. I’m happy to say that I follow all of his advice (more or less), and it seems to be working so far.
Finally, let me introduce you to a man known as Johnny Paycheck. When Mr. Paycheck was born, the stars aligned to produce a creature of such magnificent irony that we’re still wondering about it some years later. You see, one of Paycheck’s first big country hits was a song called “Take This Job and Shove It.” The song was a huge hit for everyone who has ever hated their boss at their menial, dead-end job – some might accuse Paycheck of pandering to the country music equivalent of “What’s with this airline food?”, and they’d be right. Regardless, Paycheck started raking in the cash as a self-employed musician. Not content to sing about just guns and Jesus, Paycheck had another big hit with “Me and the IRS”, in which he basically calls the tax man a bastard and hits on his sister in front of everyone.
In 1991, Paycheck filed bankruptcy with the IRS due to tax problems.
Don’t be a Johnny Paycheck. Pay your damn taxes.