With the dust of the April 15 income tax deadline settling, most folks are heaving a grand sigh of relief, wiping beads of anxious sweat from their brows and gasping, "Thank goodness! Done for another year." Well not so fast, friends. Now is not the end of a nightmare. Even better, it is a welcome, fresh start. A clean slate. The coming year can be the beginning of your easiest, most stress-free tax years if you follow a few basic steps.

The biggest tax problem faced by most comics professionals is understanding the reams of constantly changing rules, laws and paperwork issued by the Internal Revenue Service (IRS). Don't let the language of the forms scare you. Take time to carefully read over the tax return paperwork. Try making a photocopy of the forms, then go over them with a highlighter pen, marking the areas that apply to you. You will find that many areas of the forms do not apply to you. This will help clarify what entries you need to make, and will help you understand where to start.

At the end of the current year, keep a copy of your completed tax return handy to highlight for the following year. This will provide you with a simple guide.

Comics creators are required to pay a variety of taxes. Like everyone else in the country, you must pay Federal Income Tax, and in most locales State Income Tax is also required. As a freelancer you must also complete the portion of the tax return for those who are self-employed. This involves payment of Self-Employment Taxes and Social Security Payments.

Unlike regular employment positions, a freelancer does not have withholding automatically deducted from his paychecks. Withholding is the percentage of funds employers hold back from employee paychecks, for a variety of programs including income tax, social security, and company pension plans. Since comics professionals are not technically employees, but are self-employed freelancers, they are responsible for withholding those monies themselves. This is where most tax problems arise in the comics industry - poor organization and lack of self-discipline. It's very easy to look at that nice fat check from your most recent job and see the beautiful new drawing table or that hot stereo you've had your eye on. But remember, not before you withhold your tax money!

1) Start setting aside 20% of every paycheck in a savings account.
Every paycheck that arrives must first have taxes deducted. For a freelancer, your taxes and social security are going to amount to an average of 20% of each check. Establish a savings account where you can keep that money, untouched, until your tax payments are due. Don't procrastinate and don't be waylaid by extravagant indulgences. The 20% now is nothing compared to the substantial end-of-year bill and subsequent IRS penalties and interest. You'll only spend your career playing catch-up. If you think you'll have a big-income, low-expense year, increase that amount 5-10%, to allow for the increase in taxes.

2) KEEP ALL YOUR RECEIPTS!
This should be the cardinal rule of good financial management. Although it may seem like a burdensome task, you will find that over time it becomes quite automatic. You will also discover that those seemingly inconsequential receipts add up to surprisingly big deductions at tax time. Don't forget to look through your checkbook register and credit card receipts in case you weren't issued a separate receipt or neglected to keep one.

3) Be sure your deducting everything you're entitled to deduct.
Make sure you understand exactly what items and expenses you are entitled to deduct. The IRS' Income Tax Guide spells out what is and is not allowed, line by line. Read through these lists and ensure that you are recording any expenditures that apply. Some standard deductions that you are entitled to as a freelancer include:

Dental/Medical Expenses - If you have an expensive year on this front, total up those receipts. If they exceed a set percentage (see the IRS Tax Guide) of your income, you are entitled to deduct these. This does not include health insurance, which was disallowed for the 1994 tax year - a shameful call by Congress.

Vehicle Mileage - it's not really such a big deal to note the date and start/stop odometer reading. If you are traveling for business (not commuting) - errands, meetings, business trips - you can deduct a whopping 29-cents per mile! Charity work entitles you to 12-cents per mile. Those miles will really add up, as will your deductions.

Business Expenses - any item or materials or equipment necessary to do business. Envelopes, fax machine, packing tape, rubber stamps, desk; these all fall under business expenses. You can now deduct as much as $17,500 in business equipment in the year you buy it. This is much more helpful than spreading it out over a period of years through depreciation.

Supplies - any items necessary to create your work. If you write, this can include reference books, typing paper and pens. If you're an artist, this includes paints, ink, illustration board, erasers, etc.

Travel, Meals and Entertainment - These are two separate categories, so keep your receipts separate. Travel includes the cost of getting there (air, bus, train, boat, car), your accommodations (hotel, pay a friend - but be sure to get a receipt), and any taxis, buses or limos that ferried you around. Meals and Entertainment include just that, but must be associated with business. The IRS allows a standard meal allowance of $26 to $38 per day, depending on the location. If your meal budget is franks and beans, take the allowed deduction. When you're eating like an emperor, use your own receipts.

Home-Office - If you enjoy a home-office/studio situation, be sure to take that deduction. The percentage of your home's square footage used for 51% or more of your total work time, or which is designed and used exclusively as work space, is deductible. (Example: Your studio is 8 ft by 10ft, that's 80 square feet. Your home is 800 square feet. Your work space is 10% of your home. Therefore, 10% of your rent and utilities are deductible!) Don't forget to include it.

Legal and Professional Services - your lawyer, accountant and agent are deductible. Thank goodness!

Charitable Donations - besides those cash donations you make to your favorite charity, remember to include any non-cash items donated. Donated originals or signed copies of published work given to charity auctions, and donations of your time for fund-raising - these are all deductible provided you have a receipt or letter from the pertinent organization listing your contribution and it's approximate value. 4) Invoice for every piece of work you do. Keep a copy of that invoice and any payment you receive.

Despite whether the publisher provides you with an invoice form, make up your own. This will give you your own record of work and income that you can easily track. By keeping a copy of the payment (check stub, photocopy, handwritten notation), you will find it easier to keep track of your total income for the year, and also payments by an individual company.

5) Set up an easy bookkeeping system.
There are a variety of bookkeeping systems, from throwing your receipts into a shoebox for the accountant to wade through at year's end to an elaborate budget credit/debit record. To make taxes as effortless as possible I suggest setting up a simple recordkeeping form to track all your pertinent receipts as they apply to your income tax. Keep a file folder, box, tray or some other container on hand in your studio, office or home. Each day when you come in, simply dump in your accumulated receipts. At the end of each month, or every couple of months, set aside time to organize those receipts and record them in your bookkeeping system (see Sidebar for an example of a simple, but helpful system).

This bookkeeping record will save you much time and many headaches at the end of the year, as the bulk of your recording work will already be done. This type of system has the added advantage of providing tracking of your expenses against your income. This enables you to better budget your funds and set prices for your work.

6) Make Quarterly-Estimated Tax payments.
Please don't cringe or groan. This isn't nearly as painful as it sounds.
Once you have established a profit-making year, the IRS requires you to make payments every three months based on your estimated income for that year. Payment dates are April 15, June 15, Sept 15 and Jan 15. Neglecting to make these payments will result in a stiff penalty by the IRS (calculated and billed automatically). The IRS suggests you estimate your quarterly tax payments based on the previous year's income. However, the payments are amendable throughout the current year if your income dips or climbs markedly from that prior year. In this way, you can avoid heavy overpayment, or insufficient payments.

Additionally, if you are sure to make your quarterly estimated tax payments, you will find that tax time each April is a lot less financially painful endeavor. Your "balance owing" to the IRS will be small, nonexistent, or you may even (though it's unlikely for the self-employed) get a refund.

7) Don't expect your publisher(s) to pay you early so that you can pay your taxes.
Publishers are well versed in the last-minute scramble by freelancers trying to produce tax payment money. And they don't look on the practice of calling and pleading for assistance too kindly. In addition to handicapping their finances at tax time, you are also displaying your ineptitude as a business professional. This will not bode well in securing future jobs with that company.

8) Make your tax payment on time.
Although there is some allowance for delays in paying your taxes, don't wait. Make your tax payment on time, and you will avoid stiff penalties and accumulating interest. Those extra charges accrue quickly, and there's no reason to be paying more money than absolutely necessary at tax time. Just because you don't hear from the IRS when you fail to file a tax return, doesn't mean they haven't noticed. Your failure to file and make payments will eventually generate a red flag, and when the IRS finally comes down on you, the further behind you are the harder you'll fall.

If for some reason you find yourself unable to make the April 15 deadline, contact your local IRS office and find out if you are eligible for a filing extension. Depending on your circumstances, you may get a reprieve without a penalty. Even if you are unable to get the extension, you can set up a payment schedule with the IRS that will help reduce your penalties. Remember, nonpayment of taxes is a snowballing effect. Try and catch it before it's out of control and you find yourself faced with federal charges or prison time for tax evasion!

By following these simple guidelines for responsible financial management, keeping good records and paying your taxes, you will find that the approach of the dreaded April 15 tax date fails to bring the racing pulse and nervous twitch of previous years. Start now, with a fresh year, and get your tax business in order. By following this few simple rules you will grow into a comics professional who is a prepared taxpayer!