If you’re a Brokelyn reader, there’s a reasonable chance you’re a creative of some type, a freelancer or a DIYer. Go ahead and DIY those sock-monkey dolls, those hand-painted picture frames and ye olde avocado hair mask, but Rus Garofalo of Brass Taxes says the DIY approach doesn’t work too well for taxes.
Rus (above) is a video editor and improvisor in Prospect Heights, Brooklyn who took a day job assisting a tax preparer three years ago during the great freelance slowdown — and discovered more in his day job than he expected.
Since then, he’s made a specialty of doing affordably priced tax preparation (by that we mean $200 ish) for freelancers, artists, and other nice people like Onion writers, Colbert Report producers, crafty Etsy folks, actors, musicians and, yep, Brokelyn contributors. (Three of us, actually.)
Rus says the single biggest mistake a barista/painter/nanny/poet/copywriter can do is trying to do your taxes yourself – a move that can save a few bucks in the short run but wind up costing a lot more, remember, you’re dealing with many thousands of dollars here. Here’s why, in his own words:
1. You don’t have to make money from your activity to deduct all the money you spend on acting classes/yarn/cameras/paint/guitars etc. You have to be TRYING to make a profit, not actually making a profit. You’re going to pay taxes on the profit when you start making money, so take your expenses when you’re losing money.
2. Your taxes are more complicated. There are deductions you haven’t even thought of and some lots of people think are deductions are not. Seeing a good tax preparer will save you more money than they cost. No, your clothes, even if you bought them just because you have to work in an office but they’re super lame and you’d never wear them anywhere else, are probably not deductible. Your gym either. Lots of little tax tidbits are floating around and repeated, but in almost every case, the answer is, “it depends”. But if you only do them once a year, you don’t know what ‘it’ depends on.
3. Online programs are not for you. Especially if you are a freelancer or artist. They’re for people who only have fairly standard finances like w-2 jobs and mortgages, not for those who have to decide whether nightly comedy club visits are legitimate business expenses. I’d estimate that 15% of my clients sat at Turbo Tax for 2-5 hours before giving up.
4. Beware of the chains. Workers at these places are trained to get you in and out, like a restaurant, not to help you take advantage of every possible deduction. The person you’re talking to only makes a small percentage of what you’re paying, and they charge for every piece paper you hand them — every w-2, student loans, 1099, expense, and on and on and on.
5. Taxes are harder than they look. I’m a DIY guy, I taught myself to edit video so before I learned about taxes I figured I could use some program to do my taxes myself. I was wrong. There are a crap ton of rules and sometimes one way is better than another. If they weren’t complicated they wouldn’t make you so anxious. If someone set me down in front of a game I never play, World of Warcraft and told me I had to accomplish X (I have no idea what you have to do) or pay $3000, I’d be screwed and burst with anxiety. That’s basically your taxes.
Find out more about Rus Garofalo at Brass Taxes, and enter our giveaway for a free session with Rus –- up to a $200 value — by emailing [email protected]. (You must be a Brokelyn subscriber to win; please sign up here.) The winner will be drawn Friday at 5p.m. Brooklyn Standard Time. Good luck!
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I disagree. I’m 22, and a “creative type”—a fulltime graphic designer with side freelance projects. But I already did my taxes myself for 2011 and got over 2K back as my refund. It’s a GOOD thing to learn how to handle your finances on your own, instead of handing off your life to some third party. And you know what? It really wasn’t that hard, or complicated.
Rus does my taxes every year. Its a pleasure to be able to be real with a tax guy.
I also disagree–while it’s true you don’t have to make a profit to be able to deduct related expenses, this does not mean you will necessarily get a refund. You only get a refund if you have paid too much in taxes that tax year, which is determined when you annually file and take all deductions, losses, credits that you can. I hate how accountants make it sound like YOU WILL GET YOUR LARGEST REFUND EVER THIS YEAR IF YOU FILE WITH US! That’s simply not true–you will get your largest refund if you have paid in MORE than you should have, and then when you file, you deduct all possible expenses and take whatever possible credits are due to you.
It’s also not that hard. Yes, while the number of forms you might need, and how they reference each other can be confusing, entering your income, and figuring out what business-related expenses and credits you can take is pretty simple.
For most of us in Brooklyn who don’t own homes, cars, stocks, etc., there isn’t much to take this year outside of business related expenses, the standard deduction and credit, the making work pay credit, and MAYBE the earned income credit if you made less than like $8000 during the year.
I agree with the above poster–don’t hand your life off to some third party that you’ll have to pay to do your taxes–find a friend who’s done his/her own and ask them to walk you through it. You’ll feel a lot better about knowing how your taxes are calculated. If you’re more comfortable, try Turbo Tax–if you make under a certain income, the software is free, if not, I think the standard price is $40-something.
And lastly–to freelancers–if you did not pay in taxes quarterly–you will likely owe some when you annually file, if you made enough money that deductions and credits don’t completely cancel out (generally very little). I have heard freelancers complain they did not get a refund from the IRS…and then have asked them whether they paid in any taxes and the answer is usually no. A refund is not a reward–it’s a return of the amount that you paid in over than what you should have acutally paid.
I agree with Amber. I’m 25, painter, and a full-time independent consultant. I’ve been doing my own taxes for years now and quite successfully I may say. I agree that they can be tricky and only doing them once a year doesn’t exactly set you up to be an expert, but you should know how your own finances work. Doing taxes isn’t as much about the day you sit down to do them, its much more about the other 364 days you spend preparing for them. Its the same as owning a car and not wanting to know at all how it works or how to fix it.
Vote for Bee! Take charge of your life! Do your own taxes! Do your own dentistry! Perform your own proctology! Don’t let THE MAN or trained people do things for you! Take charge!
Have the above commentors TRIED paying someone to do your taxes? Are you aware that they could be saving you more by making more educated (try 30+ years depending who you hire) decisions for you on deductions etc?
I would never ever give up having my taxes done by an amazing ex-music biz accountant who now understands my finances and offers me advice on planning my financial (estimated quarterly, best years to buy equipment, IRA stuff etc.) future freelance business.
Not to mention if you are a creative person time is money. Spend it being creative, not on taxes.
Don’t go to HR Block. F-that. It took the IRS 2 years to refund me for HR Block’s mistakes. No kidding!!
Meh. They’re hard, but they’re not THAT hard. I’ve had them done, I’ve done them myself, basically a wash. If you’ve suddenly changed your situation (moved, married, quit your day job, etc.), it’s a good idea to have someone do them, but if you’re basically filling out the same stuff with different numbers every year, you can do it yourself, or crib off someone you paid to do it once.
Of course, I may also just be particularly brilliant.
I agree with Naomi, re: H&R Block. Though the preparer found a few more deductions than I spotted, she caused a lot of agita regarding my refund because of a number of typos on the taxes themselves — must have gotten the check six months after I filed.
So, where SHOULD I take care of my taxes? I still haven’t done mine, I’m leery of H&R Block/Liberty Tax Service.
Help a new New Yorker out.
I have been doing my own taxes for years, but having Rus do mine this year was SUPER helpful. He was able to answer all my questions and absolutely saved me serious money – plus, I cold be totally honest and had zero shame about my shamefully lax financial documentation. He knows all the ins and outs – even the ones that are very under the radar. It was a very relaxing tax season for me – thanks Rus…
I’ve used Russ for my taxes for the second straight year after doing them myself my entire life(except sixth grade), and I do not miss the stress or headaches one bit.
I tried a Jackson-Hewitt(do these still exist? They’re similar to H&R) tax prep place several years ago when my taxes were “easier” and it took a while to undo that damage.
Of course it’s true that it’s possible to do your own taxes. It’s also possible to cut your own hair. Because I don’t want to look like Cousin Oliver, I go to a pro. Because I don’t want to miss deductions on my taxes, I go to Rus. He’s knowledgeable and down to earth.
Here is the thing: if there are deductions you haven’t even thought of, then it’s most likely you don’t have a receipt or any documentation of those expenses. Guess what – you can’t deduct them if you don’t have the proof. If you diligently saved every scrap paper throughout the year and kept your books properly, filing your taxes is easy.
It has said “artist” on that box on the taxes where they ask what you do for over 30 years, and here is what I have learned:
1) I don’t know how to do a depreciation table. Luckily, neither does the IRS
2) A tax preparer makes it so I don’t need to pay as much as I did when I used to use Turbo Tax.
3) Once you have a studio, a house and a kid, a car, a dog, and deductions, its totally worth shelling out $300 for an expert to take it off your hands.
Russ is awesome and reliable. He knows the business of taxes and has always gotten me money back. I have been going to him or years. He takes the time to go over everything and always manages to find things that I wouldn’t have ever known to look for. I’m a freelance artist and I stick to my art, I let professionals like Russ handle my taxes.
I’d rather use a real CPA over somebody who ‘took a tax course’, so when I get called into the IRS for questioning I can take somebody who actually knows the tax code. Does this guy sign the return?
My accountant has saved me thousands over the last few years. Granted my tax situation is more complicated than some posters here, but unless i had one full time job, no real estate, no itemized deductions. I wouldn’t do it myself.
One other advantage…you are less likely to get audited if you have a CPA.
I debated over whether or not I should use a third party [Brass Taxes] to file my taxes. My feeling was, “should I really be paying someone to cross the finish line when I ran the race?” But, in the end, I went for it – not because I couldn’t be bothered with my finances [I keep very good records], but because I just feel more confident and relaxed filing this way.
I’m a video editor by trade and started my own business selling books this past year (as a lead-up to a book cafe). I decided to approach my taxes as I would any other part of the business. I do everything myself and take pride in that, but there are some tasks that are best “contracted out” for sanity and efficiency’s sake. To me, the decision became clear when I looked at it from that perspective. It’s just like hiring an extra hand when you know things are going to get busy.
This way it’s painless and I can write it off next year.
Just got back from my appt with “The Man” and feeling fine. Previously I did my own (turbo tax), but this year it was definitely worth it. I had 5 w-2’s, 2 1099’s, and needed to file in 3 states. That’s a long time on turbo tax … with Russ, it was stress free and done in an hour as promised.
I got a much bigger return than I would have on my own and with the additional tax deduction knowledge Russ provided, it more than made up for the cost of his service. Couldn’t be happier. THANKS RUSS!!!
2009 was the year I graduated college so 2010 was the first year as a true “Adult” with “Income” and “Bills.” I just met with Rus yesterday and he basically taught me my worth as a freelancer: stop having the mindset of an employee, and start thinking of myself as an independent business/brand. Also, turns out my trip to a certain Austin music festival was tax deductible… just because I blogged about it. I WOULD HAVE NEVER KNOWN. Conclusion: Rus is rad.
If you can do your own taxes and feel certain your getting every penny back you deserve, good for you, give yourself a gold star. But if you’re like me, you know that you will end up having a mental break and taking hostages at your local supermarket.
I’ve had my family’s accountant do my taxes for years, and now that I’ve had Rus do them I’ve realized I could have been getting way more money back. This was my first year working with him and I was so pleased. While working my taxes out there was a moment at the beginning where I got so excited because he got me to 0. Little did I know he’d actually get me to a sizable refund. Just goes to show what I had become accustomed to.
Again, if you do your own taxes and can say with 100% certainty that you couldn’t have gotten anymore back then good on you. I can’t. And I want someone who I can trust to understand my needs doing my taxes. I will be going back to Rus next year.
As other people have said, the claim “I do my own taxes, and I’m doing just fine,” is kind of dubious, since no one actually goes through your filings and determines if you’ve claimed everything you were supposed to claim.
Look, taxes are not some mystical thing, but it’s thankless grunt work that has always taken me about half a day to do (even using my previous filings), and I’ve had to file a bunch of amended returns as I discover mistakes in previous years’ work. To echo Caroline’s sentiment, I was able to write off groceries purchased for my own blog, which is something I had never thought of, because I was of the mindset that if I wasn’t getting paid for my writing, I would have to eat the expenses. So I had them done by Rus this year, and I learned all these new things, but you know what? I’ll probably go back to Rus (or fill in whatever tax guy you like) next year because there are so many better things I’d rather be doing with my time.
If you enjoy your time spent filing taxes, bless your heart. You should tell your friends about this and make a little extra cash on the side. Otherwise, $200 of deductible expenses is a small price to pay to get someone who is constantly in the practice of doing these things to do it for you.
My wife and I went with Rus this year – first time ever – and it was well worth it. Rus said this while we were listing our deductions: “Reality should be the arbiter of truth.” This is a fancy and deep and extremely helpful way of teaching us to account all of our actions throughout the year so that we are fair to ourselves come tax time. Before this, I looked at taxes the same way I look at the lottery – I knew I was never going to win. Rus made me a winner! Rus will make you a winner!