Some Tax Help For All You (U.S.) Freelancers
For those freelancers in the States, there’s a little over a month left to go search out those receipts and get your tax returns filed on time. Plenty of time but, if you have been freelancing a while, you then know that the sooner done, the better.
No, freelancers don’t have the option of filling out that one-page 1040-EZ form either. So say hello to the “long form” 1040. I recently received the 1040 form with instructions by mail, too, just the other day which contains about 200 pages of forms and IRS business jargon.
Good thing there is a lot of tax information available that specifically apply to freelancers. These have helped me out quite a bit and will help you get the most out of your deductions and reduce your tax liability. Or in other words, save you some cash you can use to replace that broken desk chair.
Filing The Tax Returns
The best option is to utilize a tax service such as H & R Block and have a professional accountant help you out with your returns for a nominal fee. A tax professional will be able to identify deductions that passed you by, and end up saving you more on taxes than the fees of their service. Not to mention, your risk of an audit is drastically reduced.
If you decide to go on your own, there are plenty of online tax services which make this task easy. Did you know, though, that, if your adjusted gross income (income minus expense and other deductions) is $57,000 or less, you can use a number of services for free?
If you qualify, the IRS website has a list of “Free File” websites to do your taxes. I personally recommend TurboTax since it’s incredibly easy to use and includes a check to reduce your chances of an audit.
It is almost guaranteed that there are deductions you can take that you probably haven’t considered. Did you know even PayPal fees are one of them? Check out these for a comprehensive list:
- Freelance Switch: A list of ten common (yet not-so-known) freelancing related tax deductions.
- WiseBread: Talk about a big list… 101 tax deductions for freelancers and bloggers.
- ProBlogger: There is a list of 46 deductions here, some of which overlap the above but will round out the possibilities.
The “Making Work Pay” Tax Credit
Every freelancer in the U.S. is eligible for a credit of 6.2% of his or her earned income, up to $400. All that has to be done is to file a Schedule M along with your return. For more information on this credit, visit the About.com page.
Other Tax Resources
For any other questions, advice or general curiosity in dealing with taxes, the following are very helpful in getting the answers you need.
- TaxGirl: A blog dedicated to just taxes with very informative articles. Try a search for any topic which you have questions on.
- H & R Block “Get It Right”: A community forum where you can look up tax questions by other users or you can ask a tax professional one of your own.
- Turbo Tax: Handy tax calculators plus comprehensive guides to taxes.
- IRS Self-Employed Tax Center: Normally I try to avoid anything IRS related, but there is great information on anything tax related for freelancers here.
Do You Have Other Suggestions?
Have any other tax tips not mentioned here? Leave a comment below and let us freelancers know!