Oh right, I was going to talk about taxes

This is just a followup to my short post from the other day. I’d originally meant to include some info on my first tax season as a freelancer in a while, and then totally forgot.

So, back in my early 20s I was primarily a 1099 employee for a while. I did pay quarterly taxes for about a year, IIRC, although when I transitioned into a union version of freelancing, my taxes were mostly withheld–they were still kind of a nightmare because I’d have ten or so employers over the course of the year with a corresponding number of W2s, but at least I didn’t have to manage calculating and paying quarterlies. Anyway, I kind of knew the drill. So when I started freelancing seriously again last year, I also started setting aside 25% of what I made. For most of the year it was in an account connected to Mint, and therefore part of my net worth, but I realized that was gonna suck when I actually had to use it to pay taxes, so I moved it off Mint entirely–it’s now in an account at a completely separate bank and the only thing I use that account for is tax payments.

My 2018 taxes were mostly finished a couple of months ago. Since I’d had a fair amount withheld from my regular paychecks in 2018, even though I made almost $14K in freelance income and hadn’t paid quarterly taxes on it, I still only ended up owing the federal government about $1500 and Indiana a bit under $300. And I got a decent refund from California, since I’d had taxes withheld there as if I was going to be employed there all year, which in the end I wasn’t. So I was able to move nearly $2000 from my tax account back into my normal accounts, as if I’d gotten a refund–very handy! I used about half of it on travel and about half went into my cash savings, which I’m still trying to build up to $50K this year; I’ve been stuck around $43K for a while now, moving money in and out of savings in good/bad months, but I’m hoping to permanently get up to $45K at the end of April when some checks come in. Cross your fingers for me.

Meanwhile, I also calculated and paid first-quarter taxes last week. I’m not really sure how my income is going to shake out this year, but during the first three months I received just under $10K (Jan and Feb were really good, March was not good since I traveled for half of it and didn’t work much, and the work I did do, I am mostly going to get paid for in April or even May.) So I decided to estimate $40K for the year, figuring that if things change appreciably I can always recalculate for the next three quarters. I also decided not to account for any deductions or anything like that; I would rather overpay all year and get a refund next year, really. I like refunds, it’s a psychology thing, don’t @ me.

(Also, if I really do make $40K, I’ll need that extra money to offset the extra health insurance money I’ll owe. I only estimated $30K when I signed up for an Obamacare plan and so right now I’m paying insurance every month like that’s true. But I could end up having to pay up to an extra $1200 next year if I make too much money, so it’s just as well to intentionally overpay quarterly taxes, in case.)

The upshot of all this calculation is that for the first quarter, I paid the feds about $2K and Indiana about $450. This was almost exactly the amount I had in my special taxes account from moving over 30% of my earnings (I upped it to 30% for the new year) so, go me! It is a massive improvement to simply have the cash set aside from each paycheck and be able to transfer it every quarter, vs having to make this big deduction from my checking account or whatever. (And of course it’s a massive improvement over the alternative of not paying quarterly taxes and getting hideously behind, too.) It feels tidy. And it’s easier to deal with now than it was in my 20s because you can make the payments via an online bank transfer instead of having to fill out a coupon and send in a check, etc etc.

So, that’s my tax system! 30% of everything to the special tax account, pay quarterly, hopefully get a refund next year based on business deductions, rinse, repeat.

Well, it’s been a while!

Changes are in the works around here. I’m still poking around about a few possible “real jobs” for next year, but even if I get/end up taking one of them (I’ve already turned one down because I didn’t want it enough to move for it) I plan to keep this freelancing business going, just on a pared back basis. It turns out people really need good editors (I am excellent at it, having both an eye for big picture matters and for tiny little formatting issues, which is a fairly rare combination) and will pay for it. Who knew?! The income from this is still running around 2/3 of where I’d like it to be (I’m on track for grossing $40K in 2019), but there’s a lot of room for hustle/growth left — many hours in the week when I could be working and am currently not. Basically, if I do increase my income beyond this level, it can mostly go into retirement, since what I’m making right now is sufficient for living well (vacations! dinner out!) and some cash savings. I’m certainly not saving a *ton* of cash — my savings accounts are up about $3000 over where I was at the end of last August when I got my last paycheck — but I feel OK about where I am, all things considered, especially because my plan was to spend down my savings accounts during this academic year, not pay into them!

My work has been a combination of things, like freelancing always is. I’m still doing some blog ghostwriting, though not much, about $400/month right now. I have a regular/irregular gig working with PhD students through an organization, which is highly variable month to month but also will last forever, so it gives me some continuity. I’ve commented on several people’s book drafts, to help them with organization mostly. I completely rewrote one manuscript (special circumstances, long story I can’t really tell here.) I indexed a book a month or so ago. And I’ve also done some very basic copyediting (checking and reformatting notes and bibliographies) for several people, which is not the most exciting work in the world but is kind of soothing. (I didn’t know that learning Chicago style would be the most lucrative thing I did in grad school, but there we have it.) I also picked up my first copyedit for a university press–I haven’t started working on it yet, but I do have the files downloaded and plan to get going on it next week. That’s less lucrative by the hour, but it’s a lot more reliable than the word-of-mouth network of individual scholars that’s brought me the first-draft book manuscripts.

Overall, it’s a decent mix. I like some of it more than others, of course, but none of it is terrible and all of it together adds up to a reasonable variety. My next step is to bring some stability to my work hours, I think, and really figure out a schedule that will allow me to do other things. I’m still doing about two full days a week for my main volunteer gig, and I’m committed to that through June. However, after that I may pull back to one day (or more realistically, two half-days), and use the remaining time either to pick up another volunteer gig, or to go back to doing my own scholarly writing.

I also want to think more about how to grow the business, besides getting on the freelance lists for more university presses. I’m leaning pretty hard towards transitioning my twitter account to my real name (which would mean finally shutting this blog down) so I can do more online networking–that seems to be the way a lot of people get business, not too surprisingly. Right now I’m relying totally on word of mouth from people I personally know, and while I do know a lot of people and they’ve been really helpful at alerting me to possibilities, I’d like to expand that network. For one thing, some of the work I’ve liked best has been fixing prose for ESL scholars, and my personal network isn’t so great for that; I’d like to do more of that, which means I need to seek out those communities more.