Freelancers enjoy unique benefits that come with working for themselves. They typically set their hours, negotiate their pay rates, and have the freedom to work from anywhere in the world. But tax preparation is one area where freelancers have additional responsibilities that traditional workers do not. To better understand this subject, below are a few crucial aspects of freelancing and taxes.

Filing Frequency

A freelancer only has to file a tax return once every calendar year, much like other taxpayers. But throughout the year, they often pay estimated taxes to reduce the amount they owe at year's end. Estimated fees are paid quarterly, once every three months. The IRS recommends that freelancers who expect to make more than $1,000 per year in self-employment income pay quarterly estimated taxes. Form 1040-ES is a worksheet that helps freelancers determine what their quarterly taxes are. A tax preparation professional can also determine estimated payments for the year ahead when doing the previous year's tax returns.

Extra Taxes

Freelancers must also pay added taxes not incurred by traditional workers. The most significant is the 15.3% self-employment tax, which covers Social Security and Medicare fees. Because they are self-employed, freelancers are responsible for paying taxes as both an employer and an employee.

Deductions

Deductions allow freelancers to reduce their overall tax liability amount by subtracting the costs of certain business expenses. Standard deductions include business operating expenses, such as office supplies, advertising, and home office costs; business-related travel and meals; and health insurance premiums. If you take classes to further education in your career field or to obtain career-specific certifications, you can deduct these costs as well.

The tax preparation professionals at Master Finance will ensure you honor your tax commitments while minimizing your overall liability. Based in San Marcos, TX, they serve clients throughout the Hays, Caldwell, and Guadalupe County region. They also offer affordable loans with fast and easy repayment options. To obtain tax help or to apply for a loan, call (512) 392-6102 or visit their website.