Working for yourself from home can be a dream come true for some people, but when tax time rolls around you may find yourself living in a nightmare. It’s not fun when you find out that you owe a thousand or more in taxes because your clients were all paying you through a contract system and you got a bunch of 1099s in the mail with no taxes taken out of them.
On top of the fact that you didn’t pay in taxes all year, you also didn’t pay into social security either. That means you’ll have more coming out of the money you made throughout the year, and you will even have a self-employment tax added. In order to have a fewer amount of surprises when tax time comes, here are some things you should know.
There Is Help
If you can’t afford to pay your taxes or find out that you should have paid some a previous year as a freelancer, and you find yourself in tax debt, there is help for you. The IRS will hover over you until you get those debts taken care of, so talk to someone that can help you and deal with it before you end up in jail.
There are plenty of companies out there to help you do your taxes as a freelancer. Find someone that specializes in this form of work and taxes, they will ensure you get all of the best deductions in order to save you some money when it comes to how much you owe. A great website to go through, for those that are more adventurous and think they can do their taxes on their own, is Free Tax USA.
Did You Make Donations?
Making donations throughout the year can help some, but you need to make donations through the proper channels because you’ll need a receipt showing the monetary amount of your donation. Thrift stores like Goodwill over slips to those that donate that want them, and that slip is an excellent tax write-off.
Getting All Your Deductions
Donations aren’t the only write-offs you should be considering. Anything you’ve purchased for work purposes can be written off. That includes office supplies, electronic equipment, and even furniture. If you bought clothing that you only use for work, that counts as well.
You can also get deductions for your home office space and the utilities you use in the space, including your internet. Your home office is a savings goldmine when it comes to your taxes, so make sure to count everything you can.
Tax time doesn’t have to be a nightmare. Make sure you save some money every time you get paid, and you’re sure to be on your way to paying your taxes on time and not going into sticker shock when you find out how much you owe.
Originally posted on April 12, 2017 @ 4:06 pm