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!