If you are a freelancer it is important to know that you will owe 15.3% of your income for self-employment taxes.
This percentage that you owe is supposed to make up for the Social Security and Medicare taxes that weren’t pulled out of your income throughout the year.
But if this is your first year as a freelancer, you may be confused when a W-2 doesn’t show up in the mail.
Continue reading to discover how to do your freelance taxes with ease!
1. Make Sure You Fit the Requirements
The first thing you should do is verify that you need to file as a freelancer.
Freelance work is considered to be self-employment, meaning you will file your taxes as a business owner would. If you are a business owner, independent contractor, or are a partner in a business or trade, you will have to file taxes this way.
2. Get Your Information Together
If you are working as a freelancer throughout the year, you should expect to receive your 1099 in the mail.
Each client or company that you did contract work for should send out a form. Gather all of them before starting your taxes. Make sure that you contact someone from jobs that don’t send out your 1099.
If you worked another job, don’t forget to file your W-2 as well!
3. Organize Exemptions and Deductions
The next step is to sit down and determine what exemptions and deductions you want to claim.
Many contractors are surprised at the things they can write off. Any office supplies that you use, including your computer, can help you out. If you spend money on gas or travel expenses, don’t forget to include those as well.
Personal health insurance and the costs of using your home office can be included if you have that information. Make sure you have the receipts to show proof. You can use PayStubCreator to help pull documents together.
4. File Your Forms
When doing freelance taxes you will discover that you have more work than the average worker.
You cannot forget to complete a Schedule C form. This can come in two variations. Research C-EZ and C-SE forms on the IRS website to figure out which is best. You will also need to fill out and submit a 1040 form with your tax return, which is also found on the IRS page.
5. Submit and Celebrate
After you have gathered all of your documentation and filed your forms you can verify that everything is correct and press submit!
You should be able to find any needed information on your 1099 form, including your income amount. Once you verify and send you will be able to find out how much you owe in taxes.
Some people choose to pay quarterly.
File Your Freelance Taxes in Record Time
Working as a private contractor can have its advantages, but it is important to understand how freelance taxes work.
Before starting your taxes you will need to confirm that you qualify to fill out the self-employment forms. You can then gather your 1099, documents, and receipts for proof.
Don’t forget to plan and keep a record of expenses. Deductions can come from office supplies, your computer, and travel money.
Be sure to check out our blog for more articles on money management and filing taxes!
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