Tax Tips for Small Businesses:
Savvy Ways for Writers, Photographers, Artists and Other Freelancers to Trim Taxes to the Legal Minimum

Julian Block Available at www.julianblocktaxexpert.com

Julian Block, a nationally recognized attorney, has written extensively on personal finance. His book Tax Tips for Small Businesses may just be what the freelance writer needs for answers to problem questions about taxes and finance. Block is not only a lawyer, an accountant, and a former Internal Revenue Service (IRS) special agent, he is also a freelance writer, and he provides invaluable hints that your accountant may not know.

The book includes chapters on small business depreciation, deductions for health insurance and vehicles for self-employed individuals, home office deductions, self-employment taxes, net operating losses, and section 1244 stock. He explains the intricacies of situations. For example, freelance
writers have choices on how to claim expenses for furniture, computers, and so on, but the rules take some twists and turns. He explores the circumstances for which it is advantageous to employ children in a parent’s business (and those for which it is not).

In his book, Block answers questions. He answers what he says is the most frequently asked question: “How long should I hang on to records?” and gives exceptions to the “3-year rule.” He also recounts more complex questions from writers, such as the following: “For the past few years, my writing income has been meager. But this year’s income will soar because of a 6-figure book advance. According to a fellow writer, income averaging will lower my tax tab by many thousands of dollars. When I file next spring, do I need to complete some form for averaging that has to accompany the 1040 form?” Block’s response: “Your friend’s advice might have been helpful when the Oval Office was occupied by Ronald Reagan. But the rules now on the books provide no break for someone whose income jumps. A top-to-bottom overhaul of the IRS code, the Tax Reform Act of 1986, included a provision that abolished averaging for nearly everybody, although there continues to be limited exception for farmers. My advice is to focus instead on easy and perfectly legal ways for writers to trim taxes. A standard tactic is to stash some of the advance money into one of those retirement plans for self-employed persons.”

Block addresses some unique situations, such as that of a full-time literature professor who deducted the cost of preparing a taped lecture series on Shakespeare for radio broadcasts. The IRS nixed all of the deductions, asserting that the professor lacked a profit motive for preparing the lectures because he had not been paid for them. But the Tax Court held in 1995 that the IRS should limit its application of the profit-motive requirement to sideline businesses and investments that could serve as tax shelters. The court found that the professor had taped the lectures for an entirely different reason—namely, to further his main career as a professor. That being so, the law did not require him to establish a profit motive.

The book also includes several chapters on practical advice, including tips about making payments at the end of the year, keeping records, sending checks to the IRS, extensions of time to file, and making refund claims. In addition, Block provides a list of helpful booklets from the IRS such as Pub.463 Travel, Entertainment, Gift and Car expenses.

Block has humorous quotations at the beginning of each chapter. For the chapter “Big Breaks for ‘Small’ Freelancers,” he includes a quote from President Ronald Reagan: “If our current tax structure were a TV show, it would either be ‘Foul-ups, Bleeps and Blunders’…or if it were a movie, it would be ‘Take the Money and Run’…and if the IRS ever wanted a theme song, maybe they’ll get Sting to do ‘Every breath you take, every move you make, I’ll be watching you.’” In the “Get Car Smart” chapter, he includes the bumper sticker quote: “IRS: We’ve got what it takes to take what you’ve got.”

Block's unique blend of tax savvy and background in freelancing, the IRS, and the law, make his book very valuable to writers and photographers.

— Ruth Winter, MS
Ruth Winter is an award-winning science writer residing in Short Hills, NJ. She and her husband developed www.brainbody.com , an online resource for information regarding food additives, cosmetic ingredients, nutrition, medicines, and health news.