Remote work has become the order of the day, and freelancers are at the forefront of it all. Freelancers work on online jobs for a living and are self-employed.
Freelancers are self-employed individuals that work from home. They don’t contribute directly to any economy. Freelancers source for jobs, they can do anything depending on their experience and expertise.
They can be anything from writers, coders, accountants, graphics designers, and so on. Freelancers do not go through the stress of 9-5 am jobs. They enjoy a flexible work schedule that they fix for themselves.
Notwithstanding, most freelancers do not know anything about paying taxes. Some even lack the basic knowledge about the United States tax system. Well, as a freelancer, if you’re here then you’re in the right place.
Here, we list and discuss a few things that you should know about the tax system as a freelancer.
Hire a tax professional
Hiring a tax professional will save you a lot of stress. Search for the ones that cater to freelancers and other self-employed individuals. A good tax professional will save you time and cost. They might be expensive, but you’ll surely get your money’s worth.
These professionals can even help you get tax refunds on your taxes. Remember, you can’t just employ anyone for your taxes. Research the tax professional and app before making use of it. Read more!
Be aware of how much taxes you need to pay
Never be in the dark about how much taxes you need to pay. Lack of awareness might cause you to pay more than you should. Because you’re a freelancer and work independently, you are solely responsible for calculating your self-employment tax.
If you were employed by a company, your tax would have been deducted from your salary. But that is not the case, is it? For the employed, your tax deductibles for social service and medical aid are valued at 7.65%.
But for the self-employed, you will be required to pay double (15.3) since your employer doesn’t pay the other half.
Some states in the country require their self-employed to pay tax. An example of such a state is New York. Hence, it is advisable to put aside enough money that covers the cost of tax.
Taxes should be paid quarterly
Waiting for the year to end before calculating your tax is a risk that no one should take. Rather, calculate your taxes for the year depending on how much you intend to make.
Divide the amount into four and pay a part by the end of every four months. Again, you can ask your accountant to do the calculations for you to avoid tax errors.
Write off expenses
As a freelancer, there are expenses that you should be able to write off. Those expenses aren’t common among your fellow freelancers. The IRS says you can deduct such business expenses that are irrelevant to your work.
The accountant you employ should be able to help you make the deductions and reduce your tax amount through it. You can know more at http://www.union-organizing.org/ways-to-earn-extra-money-during-covid-19/