Share:

Freelancers have more freedom than most professionals. You can work on your preferred schedule and often from the location of your choosing. While being your own boss has its benefits, your tax planning and filing procedures are different from those still working in the traditional workforce. With tax season on the horizon, use these tips to simplify the process.

How Can Freelances Better Prepare Themselves for Tax Season?

1. Know When to Pay Your Quarterly Taxes

Traditional workers have their income taxed with every paycheck, but freelancers don’t. 

If you owe $1,000 or more a year, you may need pay an estimated tax quarterly. The IRS sets deadlines every year for quarterly payments. For the 2020-2021 season, the deadlines are:

  • April 15, 2020, for the first payment.
  • June 17, 2020, for the second.
  • September 16, 2020, for the third.
  • January 15, 2021, for the fourth.

2. Organize Your Paperwork

Tax PlanningEven if you’re paying quarterly taxes, you must save all of the 1099-MISC forms you receive from each client. They’re the W-2s for freelancers. This is how you’ll report your earnings throughout the year.

However, with more employers using digital banking, you might be compensated through online payment systems. In that case, you might receive a 1099-K form instead.

Use a Schedule C tax form to report your income and expenses, even if you already reported it in the 1099 form. You’ll use the Schedule C form to also report the income you received from clients who did not supply you with a 1099.

3. Determine Your Deductions

Another benefit of working as a freelancer is the number of deductions available to you, which will save you money by lowering your taxable income.

To help grow your freelancing business, you’ll need to advertise. Report the expenses of your marketing strategy, and you’ll receive a deduction.

Deductions are also available for office supplies, like computers and related equipment. If you have a home office, you can deduct the cost of maintaining it, including utilities.

As a freelancer, you may travel for work on occasion, or have expenses in the form of business meals. Both of these are considered deductions, which will potentially decrease your tax bill.

Make your tax planning smoother by keeping copies of all your receipts and bills related to these deductions.

 

Having your taxes done by a professional will make tax season easier. You can rest assured that your filings are accurate and on time, letting you stay focused on your work. When you’re ready to file, make an appointment with Wilson, Rea, Beckel & Associates CPAs LLC. For almost 20 years, they’ve helped freelancers throughout the Pagosa Spring, CO, area. For more information on their tax planning and preparation services, visit their website. To schedule an appointment with one of their professionals, reach out to them at (970) 731-1040.

tracking