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If you recently transitioned from working for a company to working as an independent contractor, it’s wise to seek tax return help. Freelancers have various tax obligations that traditional employees do not, and they start long before it actually comes time to file. The guide below looks at some of the changes you might face this year.

How Much Do Freelancers Pay in Taxes?

In addition to the standard income tax obligations, freelancers are responsible for covering the self-employment tax, which pays into Social Security and Medicare. Whereas employees and employers split this tax, independent contractors must cover the full amount on their own, which is 15.3% of their earnings. As such, it’s wise to put about 30% of your income aside. For the average freelancer, this is usually enough to cover all obligations. 

When Do Freelancers Pay Taxes?

tax return helpWhile some portion of every employee’s paycheck is withheld for taxes, freelancers receive 100% of their earnings. As such, they’re responsible for submitting quarterly payments directly. For the 2019 tax year, these payments are due on April 15, June 17, and September 16 of 2019 and January 15 of 2020. For total convenience, you can submit these payments online after creating an account. Make sure to check your state’s requirements, as well, as they may also include quarterly payments. If you seek tax return help from a CPA, he or she can estimate your federal and state obligations every quarter. 

How Can Freelancers Make Tax Time Easier?

Paying taxes as a first-time freelancer might seem overwhelming at first, but you can make the process easier by staying organized. Keeping detailed books and tracking both earnings and expenses diligently will make tax time relatively hassle-free. And remember—you can claim all kinds of deductions now that you likely couldn’t as an employee. Examples include business-related food and lodging, equipment, research and development, and a home office. Taking these deductions when they apply can offset some of the hit from the self-employment tax. Just make sure to save all relevant records, receipts, and invoices, and store them with other important financial documents. 

 

If you just started freelancing and need tax return help, turn to Corey C Davis, CPA, Attorney at Law. Located in Kerrville, TX, this firm has been helping individuals and businesses throughout Kerr County manage their finances for more than a decade. Led by a seasoned CPA and tax law attorney, they provide both accounting services and legal advice. To learn more about their offerings, visit the website. To request tax return help today, call (830) 257-8800.

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