Tax Deductions for Freelancers
Imagine you are working for a company and your supervisor says you need to pay them $70 for the printer in your office. Crazy, right? Well, much like your place of employment will pay for the supplies you need to complete your job, the government will pay for the supplies self employed freelancers need to complete their job – within reason of course!
Tax deductions for freelancers level the playing field for self-employed individuals. This works by reducing their taxable freelance income. The less your freelance income is, the less taxes you will owe, so understanding tax deductions for freelancers is essential! When it comes to tax tips for freelancers, keeping detailed records is key. Freelance tax deductions coexist with proof that money was actually spent on something necessary to a self-employed individuals. No proof equals no freelance tax deductions. Therefore, if you go on a necessary business trip, document it. If you are going out for a business meal, document it. The more documentation, the better!
Be sure to record the date, expense and reason for the expense. If you are unsure whether or not an expense can be deducted, you may greatly benefit from the expertise of a tax preparer. A tax preparer will be aware of specific deductions that you may not be familiar with. Think of it this way, you may pay $300 for their service, but they could save you over $400 with deductions. It could be a risk worth taking. This will ensure you are ready when it is time to pay your quarterly taxes online. Paying quarterly taxes online ensures a smooth and simple transfer of funds to cover your obligations.
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Freelance Tax Deductions
What are some other tax tips for freelancers? Understand what the 1099 self employment tax is, and why it is required for self-employed individuals. The 1099 self employment tax is much like the W-2 form you receive as an employee of a company. This covers your medicare and social security taxes. Tax deductions for freelancers will still come into play with the 1099 self employment tax.
Filing taxes as a freelancer is somewhat open-ended, it can be challenging or a walk in the park. Whether you choose to enlist a third party to help you manage your tax payments is entirely your choice, but you may find that freelancing and taxes can be hard to manage alone. Managing freelancing and taxes each require time and attention. Your business will continue on when taxes are made an equal priority with everyday tasks. And your business can flourish if you look to reduce the amount of time it takes to manage them.
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