Good morning Dinks. This week I started preparing my tax information to take to my accountant and I was pleasantly surprised with my habits in 2012. I prepare as much information as I can before I visit my accountant because (although he is a great guy) he charges by the hour.
I track all of my income and spending because I can deduct a lot of my expenses against my freelance income, I also track my spending throughout the year because I like to know where my money is going. If I didn’t track my spending for income tax purposes I honestly think that I would still do it.
Your income taxes can say a lot about your lifestyle
Tracking your income and expenses can say a lot about your lifestyle. Income taxes are a glimpse into someone’s personal and financial life; think about what your income taxes say about you. Do you eat out a lot? Did you have medical expenses? How do you save and invest your money? All of these questions can be answered by tracking your income and expenses and filing your income taxes. A few years ago (after the market crash) my income was substantially lower than it was in previous years and my accountant asked me “What happened this year, you decided not to work?”
My expenses increased and my income doubled
In 2012 my income from freelance writing work doubled from the year before and that is good news; but it also means that I worked twice as hard. I definitely enjoyed the fruits of my labour in 2012. I took several vacations during the year, mostly for blogging conferences and workshops, but nevertheless I travelled quite a bit. This is the great thing about having a secondary income, you can spend it on yourself and it doesn’t affect your regular living expenses.
Working twice as much means less time with my friends and with my boyfriend, it also means less sleep. I am definitely proud of my accomplishments last year but I am not sure they are going to be the same in 2013.
My habits will change in 2013
Last year I booked as many freelance jobs as I could, mostly because I wanted to build my portfolio and partly because I wanted to make money so that I could support my travel habit. Making more money means that we have more money to spend, but if we don’t need money to spend (or save) should we still be working as much?
This year I decided to cut down on my personal and business travelling, this year I am going to save as much of my secondary income as I can. I will of course still have to pay for the basic expenses that are related to my freelance work such as website maintenance, advertising and office supplies, but I am definitely not going to travel as much as I did last year. When you travel only the actual travel expenses (i.e. flight and hotel accommodations) are tax deductible, all other expenses are just money that has been spent. I love travelling so we will have to see how this turns out.
Photo by Donkey Hotey
Kristina Tahnyak
Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.
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