Guest Post: Protect Yourself: Tax Guidelines for Freelancers

When you’re a freelancer in the United States, it is extremely important to keep good records of your income and expenses. It is also important that you know exactly what to do when it comes to your taxes. You don’t want to make a costly mistake that creates a problem between you and the IRS, so make sure you are well aware of everything you need to do on your taxes. It would be nearly impossible for me to include everything you need to know about your taxes, so you will need to do a lot of research if you want to take on this task yourself. Instead, I will write a few guidelines you need to follow. Hopefully, they will help you start your search for other tax rules you will need to follow as a freelancer.

You Should Be Paying Taxes on Everything You’re Making

If you’ve had a job in the US before, you probably already know that you have to pay taxes on any income that you earn. This means that you’ll have to report all the money you get through PayPal or any other type of account. It is entirely your responsibility to keep records pay taxes on all of this income. Otherwise, you are at risk of getting into legal trouble with the IRS.

Not only will you need to report your income to pay federal and possibly state taxes on that income, you will also have to pay Social Security and Medicare taxes. This could all add up to be anywhere between 40% and 50% of your total income, so you will need to be prepared when it comes time to pay your taxes. Make a plan that you follow throughout the year to make sure you will have enough money to pay all of these taxes when they come due.

Don’t Try to Hide Anything

Some freelancers have been known to try to hide some of their income from the IRS. DO NOT DO THIS! Even PayPal has started to report income to the IRS, so don’t think you can avoid paying taxes by using this service. The company could even be subpoenaed should you get audited to give up records of your account. The IRS has the ability to track most forms of income, and if you try to hide it, you could be charged with tax evasion, which is punishable by fines or even jail time. It’s always best to assume that the IRS can see everything you’ve been doing throughout the year, so you should own up to all of it before you get into trouble.

Tax Deductions You Can Use

The good news is that there are lots of deductions you can use as a freelancer that many other business people won’t be able to use. The following are just a few of the deductions you might be able to use if they apply to your business.

• Health Insurance Expenses – When you are self-employed and pay for your own health insurance, could be able to take the cost of your health insurance premiums and put them down as a personal deduction on your Form 1040.
• Equipment – If you use your computer, software, furniture, or other equipment for your business, you should keep track of the expenses for these assets and when they were purchased.
• Home Office – There are ways to deduct expenses for your home office when you are self-employed.
• Books and periodicals used for research
• Further education classes
• Memberships to professional clubs
• Internet access fees
• SEO services and fees
• Office supplies
• Business equipment rental
• Data storage fees
• Tax preparation fees

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Elise Brown is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about paydayloans.