Freelancing has many benefits, including working from home, working on your own schedule, and getting paid the full amount that you make. This can also be a downside, though, because tax isn’t automatically withheld or taken from your paycheck, which can get you into trouble when tax day draws closer, if you aren’t careful. Here are a few tax help tips for freelancers to help you avoid a situation where you need a tax attorney to find you tax relief
- First and foremost, make sure you consult a tax attorney or accountant to determine how much you should be withholding from your pay on a monthly basis so that you don’t have to suddenly come up with your entire tax bill when it is due. This is the biggest key to tax success as a freelancer.
- If you have a home office, you are eligible for a home office deduction. The IRS does scrutinize these deductions more than others, so make sure your office is in a completely separate room or area of your house and is the principal place where you do business.
- If your business is a one-person venture, make sure you report your income and expenses on Schedule C. This means your expenses directly offset income, you will be paying self-employment tax if you make more than $400 in net profit, and you can show a profit for three out of the past five years.
- If you are paying COBRA premiums, but you aren’t working, make sure you track your out-of-pocket medical expenses to see if you are eligible for a medical expense deduction, come tax time.