Self-Employment Tax Overview
Go to: Previous Article Next Article
For those who are self-employed, its common knowledge that working for yourself can be a great way to get ahead financially. You can also be your own boss and have the freedom to make important decisions regarding your clients, work schedule and overall business operations. However, you also are probably all too aware that filing taxes as a self-employed person can be difficult. Whether you are an independent contractor, consultant or freelance writer, there are some things you should know in order to avoid setting off red flags with the Internal Revenue Service (IRS).
The first thing you will want to do is organize your freelance or independent income from other types. You will want to keep track of income reported on all Form 1099s. You will also want to keep track of all expenses related to your independent business this includes any supplies, advertising, repairs, legal expenses or other things required to do your work.
For instance, if you have a website developed or business cards printed to promote what you do, keep record of those work orders and invoices. Next, if you work out of your home, make sure you fill out Form 8829 in order to calculate how much of your home is used for business purposes.
Set aside money throughout the year to pay money on your personal income from self-employment. You will typically be paying more than if you were employed through a company because an employer will pay part of your Social Security and Medicare taxes. Unfortunately, as a self-employed individual, you will be left with the burden of paying both sides of these taxes.
Your business or service should make a profit three out of every five years to be considered a legitimate business deserving of write-offs according to the IRS. Otherwise, you have the burden of proof that your business is viable. If you run into problems with your taxes or have to go through an audit, make sure you get someone to represent you who fully understands self-employment taxes.
Article Source: Articlelogy.com
- Credit Cards A big selection of Cards in all flavors: Bad Credit Cards, Secured Cards, Prepaid Cards, Canada Cards, Low Interest Cards -
Word Count: 345
Reduce Your Debts Without Bankruptcy. See How Much You Can Save. Free Debt Analysis
