Dealing with taxes as a freelance worker can be a mess. The complexity of filing your taxes is often similar to running a small business, but you only have one person to do all the work. Here are some tips for simplifying the tax return process as a freelance worker.
Forecasting Your Tax Bill
As a freelancer, you'll have to pay a bit more in taxes to cover your social security costs.
When deductions on a return look a bit suspicious, an audit may be unavoidable. In addition to seeing a tax rate go up, a civil penalty (fine) may be levied if the agency deems the error to be egregious. In some cases, the deductions are so inappropriate, the IRS might suspect fraud and initiate a criminal investigation. To avoid any legal problems, taxpayers are advised to make sure any business-related clothing deductions are 100% legitimate.
Software and online programs that allow you to prepare and file your own taxes quickly have made the tax filing process a lot simpler. However, that doesn't mean that everyone should complete their own taxes each year. Even if your taxes aren't difficult, you still may be better off hiring a tax accountant to file your taxes for you. Learn why you should hire a tax account and how hiring one could benefit you.
If you have made a lot of money this year, and are worried that you are going to end up owing money when tax season rolls around next year, you can take a few specific steps right now to reduce your tax bill.
Find Organizations To Donate To
When you donate to a charitable organization, as long as you get a receipt, you can write it off on your taxes down the line.