In recent years, the flexibility and financial independence of freelancing have become increasingly attractive among American professionals. In fact, annual surveys estimate that freelancers will make up the majority of the US workforce by 2027.  But while the switch to self-employment can open up many opportunities, it can also present many new responsibilities—especially when it comes to taxes. If you’re looking to streamline tax preparation as a freelancer, consider these tips from ZP Tax in Silver Spring, MD.

5 Tax Preparation Tips for Freelancers

1. Make Quarterly Payments

Most self-employed individuals are required to pay estimated taxes to the IRS on a quarterly basis. If you miss these estimated payments, you could face a penalty fee when the next Tax Day arrives. While having to make a payment every three months may be irritating, it’s usually less stressful than having to pay one huge payment at the end of the year.

2. Create a Home Office

If you work from home, you can make it count by setting up a dedicated workspace in your house. Expenses related to your home office—such as supplies, utilities, and rent—can be deducted to significantly reduce your tax responsibility.  

3. Reconsider Your Retirement

While an employer-sponsored 401(k) is not available to you as a freelancer, there are several ways that you can minimize your tax burden by saving for your retirement. For example, contributions to a Traditional IRA account are never taxed until they are distributed. Solo 401(k)s, on the other hand, work similarly but allow much higher contribution limits than an IRA.  

4. Don’t Avoid the IRS

If your taxes aren’t ready or you aren’t able to make the full payment, it’s best to stay in contact with the IRS. In many cases, they will allow taxpayers to file an extension or arrange a payment plan to get them back on track. While these options may involve some form of a penalty, the consequences will be less severe than failing to file altogether.

5. Hire a Tax Preparation Professional

Managing all the details of your taxes isn’t always easy when you have to focus on the demands of freelancing. That’s why it’s often a good idea to hire a professional for tax help. With an up-to-date understanding of the current laws and opportunities, tax professionals may be able to reduce the amount you owe, as well as ensure that your self-employment is tax-compliant.

Whether you’re a first-time freelancer or an experienced independent contractor, ZP Tax is here to help. Offering comprehensive tax preparation services in Silver Spring, MD, this agency will help you avoid paying more than you have to and offer solutions to minimize your tax burden. Visit this team online to learn more about their tax and bookkeeping services. To schedule a consultation, call (301) 587-4829 to speak with a trusted expert.