2 Minute Tax Advice For Freelancers
So you’re a freelancer.
Maybe you freelance full-time. Maybe it’s just a side hustle that you pursue on nights and weekends. Either way, you’ve gotta pay taxes.
It’s kind of a shocking wake up call right? You think, wow, this freelancing gig is just so…. free! And it is most of the time. You have the freedom to work where you want, when you want, on whatever you want. And you can do it all butt-nekked if you so choose. But that freedom comes at the expense of having your taxes managed for you.
Since you’re now in charge of managing your own taxes, let’s make it as pain free as possible.
Here’s the need to know:
- You pay taxes on your adjusted gross income, which is the money you earn freelancing minus deductions. Depending on how much that is, you’ll pay a combination of income and self employment taxes.
- You should pay your taxes quarterly in estimates, or all at once before the April 15th deadline. Either way, you should be setting aside a percentage of every dollar you make for taxes. If you want to pay quarterly, use AND CO’s Quarterly Tax Calculator.
- You can’t guestimate your expenses. You need to religiously track expenses and save receipts if you want to write things off and keep as much of your money as is legally possible. No reason to fear auditing if you’ve documented everything you claim.
- You can, when appropriate, claim the following as tax deductions: domain and web hosting costs, home office space, internet fees, business meals, apps and online services, computers, business software, advertising fees, offices supplies, vehicle expenses, and education. Read more details about tax breaks here.
- If you’re new to freelancing and you haven’t set aside money to pay your taxes this year, don’t freak out. You have two ways to handle it.
- File your taxes, then download a form from the IRS website that allows you to pay off the money you owe in a monthly installment plan. The IRS will approve you if the monthly amount is reasonable (something in the ballpark of $100 and up, depending on what you owe) and then they’ll set you up with a monthly payment plan like any other bill.
- File your taxes, then request an extension. You’ll have to send a little bit of money now, then you’ll have six months to pay the rest of your balance.
See? No reason to fear taxes. Meticulously document your expenses. “Withhold” money from yourself as you earn it. Claim all the deductions you legally can. Pay your taxes on time. Boom. You’re golden.
Creative Community Developer at Snapfluence.
I'm the Oxford comma's biggest fan.