Maximizing 2016 Tax Deductions: Tips & Tools for Millennial Freelancers

The earlier you organize expenses and keep track of potential deductions, the more money you’ll save in the long run.

Millennial freelancers are a force to be reckoned with and the numbers are there to prove it. According to a national survey from Freelancers Union and Upwork (formerly oDesk), 38% of millennials are freelancing — more than any other generation. Considering that they now make up 45% of entire workforce, this group of 20 and 30-somethings is taking the freelancing industry by storm.

It’s clear to see why. The benefits of being a freelancer align with the lifestyle that millennials seek. They want flexibility, independence and creativity – a perfect formula for a rise in freelancing jobs. But while there are many perks to being a freelancer, there are also stodgy downsides such as complicated taxes and the responsibility of tedious administrative tasks.

Luckily, there are ways to overcome these drawbacks. Tax season may be months away, but that doesn’t mean millennial freelancers can’t start prepping now. The earlier you organize expenses and understand tricks and tips to maximize deductions to make tax season a breeze, the more money you’ll save in the long run. Start sooner rather than later with these recommended tools and tricks:

Research Deductions in the Freelancers Union Tax Blog
One thing freelancers shouldn’t complain to the IRS about is the amount of tax breaks they offer. Tax breaks give freelancers a valuable opportunity to win back money they’ve been spending on their business. It’s also a unique way to encourage entrepreneurship. There’s only one problem: it’s hard to keep track of what’s what, and deductions often change on a yearly basis.

Learn about which expenses qualify for which tax break by reading the in-depth tax blog written by the awesome folks at Freelancers Union. Freelancers Union is a nonprofit organization and insurance company that advocates for the rights of freelancers. Their blog posts are written by freelance veterans and include everything from how to calculate hourly rates to how to write client contracts.

Freelancers Union Shoeboxed

Don’t procrastinate! Use IFTTT for Important Date Reminders
Unless you want to have a very stressful week, don’t wait until right before April 15 to prep and file your taxes! When you take your time to carefully approach filing your taxes, it won’t seem as stressful or time consuming. You’re more likely to make an error or miss out on a deduction if you rush the process.

Eliminate the risk of filing late by using IFTTT. Simply set a receipe that sends a email and/or text reminders on certain dates leading up to the April 15 deadline. This nifty web tool can also help with QET deadline reminders.

IFTTT Shoeboxed

When in doubt, ask for help using sites like NerdWallet
With an endless supply of information, the Internet of things can answer any question you may have related to taxes. Sometimes though, having 10+ pages pulled up with an overwhelming amount of information can make material difficult to comprehend (which is especially true for taxes). Depending on the complexity of your question, it may be best to approach a tax expert or CPA. Tax deductions change often — stay ahead of the curve and make sure you’re taking advantage of ways to save money by asking for help.

Enter NerdWallet, an educational blog that helps millennials make smarter financial decisions by breaking down complex financial information into simple terms. The writers at NerdWallet can tell you exactly which expenses qualify for which tax break as you track your finances into tax season. They also have on-demand financial professionals available to answer your tax questions directly from their homepage.

NerdWallet Shoeboxed Freelance

Organize Your Receipts and Expenses by Tax Category with Shoeboxed
One of the easiest way for freelancers to maximize tax deductions is by staying organized and keeping updated records of receipts, payments and expenses. The IRS demands documented proof for claims, so having everything stored and accessible can reduce a substantial amount of time and pressure. Organization also helps maximize deductions and reimbursements without the hassle of scrambling to find misplaced financial records.

Apps like Shoeboxed let on-the-go freelancers snap pictures of receipts using their phone, which are then digitally stored as IRS-accepted images. Receipts are processed and organized so that vendor, total amount, date, tax category and payment type are extracted and available in a searchable online account. Simply make a note that the receipt is deductible and boom – you have a digital archive of everything you can write off for taxes.

Shoeboxed Freelancers

Use these tools and tips to help make your freelance tax season the smoothest (and most time-saving) yet!

A Sneak Peek at Our Brand New Mobile App

The new iOS app, redesigned for iOS 9, will include a brand new suite of features and tools. Here is an exclusive sneak peek of what’s to come.

We’re thrilled to announce that we will soon be introducing our newest and most robust Shoeboxed Receipt and Mileage Tracker app yet!

The new iOS app, redesigned for iOS 9, will include a brand new suite of features and tools. Here is an exclusive sneak peek of what’s to come:

New navigation bar & date order – Say goodbye to the dashboard and hello to our new navigation bar! Easily get to wherever you need to go within the app by clicking any of the tabs in the new bottom navigation bar. You will also notice that all of your receipts are now neatly organized by date!

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Tag Filters – Spend a fraction of the time finding a specific receipt by selecting one or multiple category tags in the receipts list view.

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Sleeker Expense Report Tables – We’ve completely overhauled our default expense report template so your exports will look super sleek.

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Select categories at point of capture – You no longer have to wait until a receipt is processed to categorize an expense. Simply snap a photo of a receipt, select the desired categories, then click save!

Uncomplicating the Expense Report: 4 Steps

With an automated expense reporting system, employees can upload receipts, expense reports, bills, and email invoices on-the-go and on time.

Employee expense reports are essential, but managing them is a time-consuming function for any organization. As soon as an employee submits an expense report, the approver needs to review, validate, and approve the expenses to be processed immediately. This process is usually delayed because receipts are often lost, and duplicate receipts find a way to make their presence felt. And unfortunately, a large part of expense reporting processes are in violation of corporate policies. With most organizations still using paper-and-tape or spreadsheet-based expense management, the manual process is a veritable sinkhole involving complex validation and reporting.

Automation of expense management makes the approver’s job easy – and a streamlined automated expensing process is a boon for approvers and relief for employees. Here are four important things to consider to make expense reporting painless:

Ensure timely submission
Employees struggle to file and get approvals for their expenses in a timely manner. In a manual process, the approver needs to cross-reference corporate policies and keep falling back on additional references and receipts. It is estimated that 40% of employees forget to submit their reports on time and once an employee delays submission, it gets difficult to track those reports and maintain deadlines.

With automation, your employees can upload receipts, expense reports, bills, and email invoices on the go. The process is simple and alerts employees about policy deviations, unauthorised receipts, and additional requirements which can be fulfilled immediately. The do-it-yourself module of the automated expense management system makes it simple, real-time, and valid. Approvers also receive alerts from the system to immediately review the expense reports.

Validate expenses with corporate policies
It is important that employees are aware of corporate expense polices including timelines and spend thresholds. It is also important that the policy is clear about what is acceptable and ready to be submitted to the accounts payable. For an approver, validating every expense report is a humongous task. Corporate policy compliance can be increased by incorporating corresponding rules within the system. The system will automatically red-flag the impermissible claims.

Institute a participatory review process
An effective approval chain, which streamlines the expense process, encourages employees to adhere to acceptable norms. In many organizations, multiple approvals may be needed and it is important that all the reports are processed within deadline. Automated expense management can be customized according to routing needs and organization hierarchy. Approvers and higher management should be held to the exact standard as their employees. The automated alert system successfully incorporates this feature.

Leverage data analytics
Approvers can use data analytics to identify anomalies in the system. Reports and trends help in identifying expenses incurred by each employee, vendor, and department. Any unusual trend can be investigated and policy changes can be implemented immediately. Approvers should be able to review expense policies to incorporate new items and fix loopholes.

The Association of Certified Fraud Examiners found that expense frauds amount to about 5% of revenues. A streamlined expensing process and a watertight policy, which is implemented through an automated system, can help save time and money. Approvers are accountable for making the expense process simple, streamlined, and trustworthy. Automated systems like Expenzing Employee Expense Controller improve accuracy and enhance visibility of business expenses. With Expenzing tools, your employees can track their expenses real time and the bottle necks within the approval process are much reduced. The profitability and competitiveness of your business is assured through effective cost and expense management.

This post was written for the Shoeboxed blog by Ashley J., a freelancer and marketing operations manager in India. As a marketing operations manager, she focuses on growing expense control software as an open source product, and communicates the value of identity to customers, partners, and the larger community by targeting specific markets through segmentation and analysis.