The Advocates: Moonlighting

Picking up freelance work when times are tough

In the current economic climate, many people are finding that the best way to stay employed is to be self-employed. If you're among the throngs of folks thinking about ditching the corporate payroll, here's what you need to know about money management when you're no longer receiving a W-2 from an employer.

As an independent worker, it's vital to pay quarterly taxes and effectively track your income and expenses. The tracking part is easy with QuickBooks, an accounting program that enables you to bill clients, manage what you are owed, and oversee your expenses. The basic online version is $9.95 a month at QuickBooks.com, so ditch the shoebox and get automated. And remember that tracking expenses is a lot easier when you use a separate credit card and bank account dedicated to your business.

Filing and paying your quarterly taxes are trickier tasks. The IRS provides a form, known as 1040-ES, for freelancers to report income and make tax payments. If you expect to owe at least $1,000 for the year, then you need to make quarterly estimated payments. You can calculate your payment amount based on last year's income: Simply divide your tax liability figure by four. Or if you expect to be earning less money this year, you can use the worksheet included in Form 1040-ES to make a more accurate estimate. Think of it as a pay-as-you-go plan, the way an employer would withhold wages on your behalf each pay period. Take this seriously, because the IRS is not in the business of making loans and will charge interest if you're late.

Credit Where It's Due

Interpreting the tax credit for new homeowners.

Thanks to the economic stimulus package passed by Congress in February, first-time home buyers can take advantage of a new tax credit on their 2009 taxes, worth 10% of the home's value, up to $8,000.

A few eligibility rules: Only homes purchased between January 1 and December 1, 2009, qualify. Also, your income cannot exceed $75,000. The cutoff for married couples (as recognized by the federal government) is $150,000. This doesn't help gay people in domestic partnerships or in state-recognized marriages, but even if the Fed doesn't acknowledge your relationship, you and your partner are still allowed to divvy up the credit for the new home.

Personal Finance 2.0

Mint.com is like your BFF who's good with money -- annoying, but helpful.

Do you need to be in constant contact with your money? Mint.com is a free financial management site that can be personalized in a matter of minutes. Synched to your online banking, credit cards, and investment accounts, Mint downloads your transactions, tracks your expenses, and lets you know if you're living within your means. How much did you spend this month on Prada? On porn? You'll know -- even if you'd rather not.

Even more useful is the companion iPhone application (also free). You can check your balances on the go -- when financial hiccups are more likely to occur -- and avoid spontaneous budget busting.