I apologize that this post is a little off-topic. I tried to bring it back around to manga, but it’s a little shaky. Here goes:
If there was one thing I wish someone had taught me how to do when it came to life’s many lessons, it would have been to sit me down and tell me how to do my taxes.
Let me explain: having to do my taxes is one of the few things I’ve dreaded about being an adult. I’m horrible at math more complicated than basic arithmetic and I don’t understand economics in the slightest. Before becoming an independent, all I did in terms of taxes was sign the forms my mom got from her tax guy.
So after said tax guy gave me a quick de-briefing on when to pay the IRS, what to deduct and all that jazz once I became a freelancer, I kind of forgot about it all. I knew I had to set aside a certain amount to pay the IRS, so I did that every few months. Then I came home off my trip to Thailand, caught up on work and realized that I had to pay the government soon! In only a few days, actually! Oops.
I tried desperately to understand the tax forms, but it just read like gibberish or there was information I couldn’t provide blocking my way. It was frustrating. It’s not like I didn’t know how to fill out other stuff, but somehow I couldn’t get over the hill and into “this makes sense”-land.
I wound up asking for many people’s help, including other freelancers, former freelancers and that tax guy I mentioned earlier. While many people were more than willing to try to help, still nothing pushed me over the hill into understanding until I finally got a hold of my mom’s tax guy again.
And then he did it all for me. I was kind of flabbergasted at how simple it was. I just told him how much I made, what my various deductions were and he sent me an invoice to send to the IRS with how much money I owe them for my quarterly estimated payment. (What freelancers/small businesses have to pay the government.) Why isn’t doing taxes on your own this simple? (Seriously, there’s something wrong with our government if taxes can’t be done by someone who isn’t trained to do them.)
What does this have to do with manga? Very little. But to be honest, I see the manga industry heading in a direction where a large part of the work is sent outside the company. I see very few full-time job listings from publishers except for sales people, programmers and the occasional executive or designer. If another type of post pops up, it’s because someone has vacated a job the publisher deems vital enough to keep. So what’s left? A network of freelance translators, adapters, editors, letterers and designers. To be frank, I think this entire nation is heading towards freelance because so many Americans don’t have jobs except for the ones they can create themselves. Anyone preparing themselves to try and enter the industry needs to be aware that their taxes are a bit different from everyone else’s and you aren’t going to be panicking with everyone else on April 1st.
Here’s a few quick tips:
1. Get help from someone: Unless you studied to be a CPA in college, you probably won’t understand the tax forms and myriad of literature that tells you how to fill them out. If your parents, other family members or friends can’t help you get things sorted out, it might be worth it to pay someone. I’m super glad my mom had a trusty tax guy under her sleeve because I went into panic mode once things really stopped making sense. Worth it.
2. Don’t wait til the last minute: Trust me, you don’t want to be at Step 1 wondering how you’re going to all this two days before that estimated payment is due. The ensuing panic attack is horrible.
3. Keep good records: This totally saved my ass this time. I had all the information I needed to give the tax guy, it was just a matter of putting it all together, which didn’t take very long. It will also serve you well if the IRS ever decides to audit you, so don’t throw things away just because you’ve made your payment.
4. Learn what you can deduct: I was hoping to deduct some of my rent, but since my home office is pretty much just the extra chair on our small dining room table and not a whole separate room used only for work, I couldn’t deduct it. Bummer.That being said, deductions won’t be the same for everyone, so double check what you CAN deduct.
5. Deduct your manga: If you freelance in the comic book publishing industry, or at least as a freelance editor, all your comic book purchases are deductible. This is a super-awesome fact that I grin about every time I hit the comic book stores. It makes me so happy!
Anyway, I hope this post does some good for someone who is just as clueless about taxes as I have been. Educate yourself if you’re a freelancer!
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I appreciate you bringing this topic up, because I nearly forgot about paying my estimated tax this month. Eep!! (I came up with estimates last April and marked them on my calendar so I know how much I need to pay, at least.)
The first year I worked as a freelancer I paid the $100 or so to get TurboTax (the small-business edition), which told me exactly what to fill in where and came up with a number for me. After that, I decided I really did not like having to pay $100 (even if it was deductible on the next year’s taxes) so I used their website to fill in all my info just as I had the first year, got the magic number… and then went to my paper tax forms and filled things out the same way, making sure I reached that same number. I was very pleased to find out you don’t have to pay for TurboTax until you actually submit the information with it. I get frustrated and a little confused every year in mid-April, but I’ve always managed to work it out so far! (the first year was the worst, because I really didn’t know how much I should be setting aside, and had put the majority of my income into paying off my student loans, so I had like nothing left when I had to pay all my taxes. I definitely learned my lesson from that.)
On another note, since I just started lettering manga in 2010, I’m curious about the possibility of deducting manga purchases. It makes very much sense for an editor, but for a letterer is there quite enough of a connection? (and on that note, I wonder if I should’ve been deducting children’s book purchases all this time, as a freelance children’s book illustrator…?) What do you think? (I’ll probably ask around for more opinions too, so no pressure!)
Yes, as you work in the publishing industry, any books you buy (children’s books, comic books, manga, etc) would all be deductible.
Glad you weren’t as unprepared as I was!! I was seriously going “Oh shit, oh shit, oh shit” because it’s the first time I’ve done any of this!
I thought about using TurboTax and I *tried* to use it for free, but I kept running into road blocks. I imagine this post wouldn’t have come up if TurboTax had just been easier on me.
Like Adam said, I’m pretty sure you can deduct manga & children’s books if you work in the publishing industry. Gotta stay on top of the game, right? 😀
Maybe it helped that I did purchase the program for the first year, and also had my dad close at hand for any questions I had (“Is this right? Can I claim this? What’s that mean?”). For the following years, it remembered all my previously entered info, which helped cut down on the confusion because aside from specific dollar amounts, most things hadn’t changed much (though I still get so confused figuring out how to deduct my computer, since it depreciates in value each year.) I’m glad you were able to get outside help too!! Taxes are seriously intimidating to try to attempt entirely on your own.
And thanks, both you and Adam, for the response! Now I get to go through all my bookstore and online receipts and figure out what ridiculous amount I’ve spent on manga and picture books this past year… wheeeee!
Yeah, if I had a knowledgeable person next to me, that would have helped. All I had was my boyfriend and various people (mostly through online) trying to give me stab in the dark advice. ^_^;;; It didn’t wind up helping much, although I certainly appreciate their efforts.
Deduct away! Although I would double check it against something official/professional before you do it. I found out about it from my tax guy, so I trust his word.
Hmm….My manga can be count as a deductible? heeheehee Maybe I should think about becoming a freelance something. haha
If you make money off your blogging, then you have to pay taxes for it. Which would mean your manga would be counted as a deductible, since it’s directly related to your blog. (But double check that with a pro before you do it, OK?) But yeah, freelancing in the publishing biz = deductible books. (Yay.)
I’ve been freelance lettering/retouch for twenty years (?!) and have yet to pay quarterlies on time.
Kids, don’t try this at home! The IRS will charge you interest and penalties. PLUS, they charge you for the installment plan when you can’t pay the taxes that you’ve owed.
I’ve just recently developed the habit of setting aside 1/3 of every paycheck just for taxes. My fatalist nature can’t part with the money until I have to file because as freelancers, we’re all two paychecks away from the streets. But I find that I’m not having to pay steeper penalties and installment fees and my mind is a bit more at ease.
Oh yeah, conventions are deductible too. Bus fare, car mileage, parking fees, eating out, all deductible if you work in manga/anime and going to a convention.
Oh wow! I just don’t want to pay late fees or anything like that, so being on time is important to me. I make precious little money as it is.
I set aside 25% and that seems to be enough (but I hadn’t done it for awhile, so it totally killed my bank account this time! Plus my clients owe me serious monies. They are taking too long to process my checks. :<)
I definitely deduct cons, car mileage, car payments, parking, food, hotels, any passes I have to pay for, etc. ^_^ It's me promoting my business and furthering my career, it definitely counts!