As a freelancer, you have the flexibility of deciding how, when, and where you work, but when it comes time to pay taxes, that freedom can quickly become daunting. Without an employer to help manage your tax withholdings, it’s your sole responsibility to make sure your obligations to the Internal Revenue Service (IRS) are taken care of. Thus, you need to know how to appropriately plan for tax season. Here are a few tax preparation tips that will make it easier to file your return and allow you to keep more of your hard-earned money. 

Do:

Keep track of all business-related expenses. 

Writing off business expenses is one of the most effective ways to save on your taxes. To take advantage of this benefit, you must keep well-organized records of everything you spend.

You’ll need receipts, bank and credit card statements, and invoices to support your deductions in the event the IRS requests proof of your expenses. Store these documents in a safe place so they’re accessible when tax season arrives.

Consult a CPA.

The IRS has different filing requirements for freelance taxpayers. This can make your tax preparations more complex.

The best way to avoid making mistakes that result in costly penalties is to partner with a certified public accountant (CPA). They’ll know which forms you need to submit and ensure they’re filled out accurately. A tax professional will also advise you on all the deductions you’re eligible for and minimize your chances of getting audited.

Don’t: 

Fail to report all of your income. 

When all your earnings come from freelancing, it may be tempting to leave some of it off your tax return, especially if you’re paid in cash.

However, the IRS requires that every dollar of income be reported. Should they notice any discrepancies between the amount on your return and the 1099 forms they receive from your clients, you’ll have to pay the difference of what you owe along with penalties and interest.

Wait until the last minute. 

It’s best to start your tax preparation as far in advance as possible. This will not only eliminate the stress of scrambling to file at the last minute, but also give you more time to check that all your deductions are correct, locate missing paperwork, and strategize ways to decrease what you owe. 

If you’re looking for a reliable CPA to help you successfully plan for tax season, turn to Engelson & Associates in Holmen, WI. Backed by years of accounting experience, they provide each client with personalized tax preparation and advice. They’ll carefully assess your earnings and business expenses to determine the best solutions for maximizing your deductions. Call (608) 526-3437 to set up an appointment, or visit them online for more information on the services they offer.