Voice Acting & Taxes, Part Two: Expenses and the Benefits of Overpaying
Navigating taxes as a voice actor can be daunting and anxiety-inducing. It’s a stressful balancing act that requires you to figure everything out by yourself and pay on time and accurately.
If you feel stressed about your voice acting taxes, we have a few tips to help filing go smoother, so you can avoid audits and penalties.
This is part two of our voice over taxes series, where we review how to track your income and expenses, the importance of storing all your documents in one place (either physical or digital) and why overpaying on your quarterly tax returns could be an advantage!
We can’t make your taxes go away, but hopefully, we can make the tax filing process easier for you.
Diligently Track Income and Expenses
Use those spreadsheets, people. The best way to make tax season a breeze is diligently tracking income and expenses related to voice acting.
If you’re a contractor or freelancer, we know payments can come from many different sources. Some clients may use PayPal, others Venmo, bigger companies use direct deposit, and so on. Some people may even pay you with a check or cold hard cash.
Before things become too chaotic and confusing, enter every payment into a spreadsheet and include details such as:
- Date of the job
- Date of the payment
- Payment amount
- Payment method (ACH, PayPal, Venmo, cash, etc.)
- Job description
- Client or company name
If you’re uncomfortable with spreadsheets, just writing this information down in a notebook is better than nothing. When tax season arrives, sifting through PayPal transactions and bank statements is not ideal; organization is a freelancer’s best friend.
It’s essential you track your income, so you are less likely to get audited. But it’s also beneficial for you to track your expenses. If you have to drive to jobs, use gas, and pay for car maintenance, all of these can be a deductible expense. If you purchase voice recording or editing equipment, you can probably deduct them from your taxes, meaning you pay less.
Store All Tax Documents and Receipts in One Place
Keeping a record of your expenses in income is crucial, but you should also keep evidence of these financial actions.
We know it’s an extra task that can be annoying, but printing out PayPal transactions and keeping receipts for throat lozenges can help you save money on taxes and keep you out of trouble with the IRS.
If they ask you to prove anything, you’ll have a handy folder or binder filled with all the proof you need. And it’s another way to keep your voice acting taxes and finances as organized as possible.
Stay on Top of Quarterly Payments
Most voice actors must pay quarterly payments, which estimate their income tax per quarter. The IRS requires self-employed and freelance workers to pay taxes every three months instead of a lump sum in April. It sounds like a pain, but aside from shelling out money, paying quarterly taxes is easy.
However, if you miss the deadlines, you may end up with hefty penalty fees in April. If you miss the payment, the penalty starts at 0.5% of the underpaid amount. This small percentage can add up quickly, and can easily be avoided by paying on time. The quarterly estimated payment deadlines are:
- January 15th (For September 1st to December 31st income of the previous year)
- April 15th (For January 1st to March 31st income)
- June 15th (For April 1st to May 31st income)
- September 15th (For June 1st to August 31st income)
So mark these dates on your calendar. In addition to late payment penalties, the IRS can also charge you fees if you significantly underpay your estimated taxes. Underpayment penalties can be between 5% and 25% of the unpaid amount. For this reason, it’s important to try and estimate your taxes as accurately as possible. This brings us to our next voice actor tax tip.
When in Doubt, Overpay
If you’re doing your quarterly tax payments and you’re not sure if you should pay $1,000 or $1,100, we recommend paying $1,100. In the moment, this is annoying. But if you overpay, the IRS will refund the overpayment.
But if you underpay, you’ll wind up paying more money than you would have if you overpaid. Trust us, we don’t relish giving this advice, but it’s the best way to cover all your bases and protect yourself from penalty fees and audits.
Take Your Time
This advice applies to all tax filers, but especially freelancers. When working through your taxes, take your time and double-check everything. If you’re using an accountant, they’ll make sure everything is in order for you.
But if you’re filing with an online, automated assistant, go through each step slowly and make sure you don’t overlook or miss anything, such as deductible expenses or random income.
Sites like TurboTax and TaxSlayer give you plenty of opportunities to review your information to ensure everything is accurate. Take advantage of this great software And when you reach the end, just before you’re about to file, go back to the beginning and double-check everything again. The last thing you want is to have to redo your taxes.
Don’t Do Them on Your Own
Our last word of advice is to not brave this big task alone. We know that freelancers like voice actors often operate on tight budgets, but the extra money to have help with your taxes is worth it.
So instead of getting into hot water with the IRS,, just pay for the tax help. You can hire an accountant or use an online filing website to help you accurately and efficiently file your voice actor taxes for 2023.
Final Tips for Voice Actors
Remember these tips when filing your taxes, and, most importantly, stay organized and calm. If you get overwhelmed, it’s okay to take a break. Sites like TurboTax will save your progress, so you can come back later. For this reason, we also recommend starting earlier, not on April 14th.
Try to start your tax filing around April 1st, giving yourself time to sort out any issues you encounter. We believe in you.
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