If you are a freelancer or self-employed, you have a lot on your “plate.” For some, it is all they can do to find work, do it well, and collect payment. For the most part, freelancers and self-employed individuals choose this life because of the freedoms it affords; a flexible schedule, working from home or some place more fun than offices typically are, being their own boss, etc. But the truth is, being an employee of someone else does have a perk or two and it may take a year to learn what they are. Come tax time, they will learn that it’s very nice to have someone else automatically deduct taxes from your pay and issue a W2 with all the information the government needs about your income on it. This makes tax time much easier.
Who Owes Self-Employment Tax?
If you are a freelancer or self-employed, we can help you manage this aspect of your “business.” That is how the IRS views freelancers and those self-employed as a business. So, as a business, there are specific things you need to do each year. Of course, everyone who earns an income, must pay income taxes, but did you realize that if you, as a freelancer or self-employed individual, generate more than $400 a year, you must pay self-employment tax? There are several nuances like this that we at CPA Accounting and Tax Services can help you with. For example, knowing which IRS forms to complete can be confusing. We know all this and can make tax time easier for you.
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What about 1099s?
What about your clients? If you make $600 or more from any particular client, you must receive a 1099 form and report that income on your tax return. Most freelancers perform work for more than one client. At times, there can be several, dozens, or even hundreds. That can be a lot to keep track of and report. Plus, be sure to issue a 1099 for anyone that you paid $600 or more to do work for you. We can create and issue 1099s for you.
Best Times to Pay Taxes
It’s best to pay taxes throughout the year (at least set-aside taxes monthly or quarterly) rather than pay one large lump sum in April. We can set up these payment plans with the IRS on your behalf. Remember, CPA Accounting and Tax Services can handle all your tax needs. We are happy to help you file your tax returns, but we can also help you save money by identifying deductions and exemptions that you may qualify for. This is what we do. Let us handle this for you, while you work on earning money!
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