Working freelance has many benefits, from making your own hours and only taking on the work you want to the freedom to work from home. However, it also means taking on many of the accounting and tax functions that would typically be handled by human resources. As tax time approaches, make filing your income tax return easier and prevent unpleasant surprises by following these tips.

Do:

Pay taxes quarterly.

When you freelance, you're responsible for paying the IRS directly for your income taxes and FICA taxes (Medicare and Social Security taxes). However, don't wait until you file your income tax return to pay the bill, since the IRS will charge a penalty for underpaying your taxes all year.  A good rule of thumb is to put aside 25% of your earnings to pay the IRS every quarter. This will also prevent a large tax bill when you file.

Keep track of expenses.

Freelancers can deduct business expenses, including office equipment, business travel, and any education, marketing, or office space costs, to reduce their tax liability. These expenses must be "usual and customary" for your business, and you need to have detailed records to support your deductions. Maintaining a dedicated bank account and credit card for your freelance business can make life easier at tax time, as you'll have clear records of what you earned and spent.

Don’t:

Take excessive deductions.

It should go without saying, but avoid taking deductions you aren't entitled to. For instance, you can only deduct a home office if the space is exclusively used for your business. For this reason, you can't deduct your bedroom or the family room as a home office. A qualified income tax preparer will help you determine what you can and can't deduct, so you don’t end up in hot water with the IRS.

Go it alone.

It's possible to file an income tax return yourself, but working with a professional ensures you don't miss any deductions or credits, which can help you pay a lower tax bill. If your record-keeping isn't exactly perfect, you haven't made quarterly payments, or you have multiple 1099s from several clients, a tax pro will also help you make sense of it all to file a correct return.

Filing your income tax return as a freelancer can be tricky, but America’s Favorite Insurance & Tax has you covered. They offer professional tax and insurance services to clients from San Antonio, TX, and Pompano Beach, FL, so they can help ensure all your documents are in order. For more information about their tax preparation services, call (972) 662-8221 or reach out on their website.