How to do freelance taxes?

Date - it helps to keep track of your freelance taxes if you have a date for when the work was completed. Type of income - whether the dollars from a particular transaction were earned as salary or as a "modified fee.". Credit card companies charge their own fees, so expenses incurred using credit cards must be broken out and properly allocated. Expenses - include mileage, ground transportation costs, parking costs, tolls and any other outlays necessary to complete the assignment. It's also good practice to break down the time spent at the event into hours worked. Expenses doesn't need to be limited only to cash-related items, though! Outlay for business meals is an expense too!

Answer: I would personally recommend using TurboTax to do both your individual and business taxes.

Doing your taxes can be tricky, but TurboTax will make sure you stay out of trouble with the IRS. With enough information from you, it can just about do all the work for you, leaving only a few calculations and decisions up to the user. Another popular alternative is H&R Block which is similar in form and function as TurboTax, but may require more input on behalf of the user than TurboTax requires.

First, you'll want to get a copy of your taxes from the previous year and see what deductions could be utilized. Next, make sure you know how much you made throughout the current year (both self-employed income and other sources such as side jobs). Then enter all your business-related expenses - this will include things like driving to meet clients or deducting mileage for your business vehicle. Finally, it shouldn't take too long with most programs to walk through any additional tax exemptions or deductions that may apply.

One must determine whether they are self-employed or an employee. This is based on how much control the employer has over their hours, workload, and work environment. A freelancer would need to make quarterly estimated tax payments for each year of anticipated income, not counting the current tax year that is underway for any wages earned by being employed by someone else during that time. The expenses qualified as deductions are generally just costs incurred in generating income but not ones associated with getting ready for sale - tools necessary to produce the product are deducted once it's sold whereas those used to create it can't be.

If you're a freelancer calculating taxes, there are a lot of things to account for. Instead of going it alone, use the help from an accountant to get your W-9 and 1099s in order so all your information is up-to-date. They'll also be able to handle any income tax filing you need done throughout the year too for between 50 and 100 dollars per hour. That way, when tax time rolls around next April, you have everything together and can get right on that return! FAQ. Q: What if I make a mistake?

Taxes for freelancers vary, and the tax specifics depend on each person's state and how they organize their business. However, here are some general guidelines. Setting Up a Business Structure. If you're freelancing as an individual (sole proprietorship or single-member LLC), you only need to file Schedule C of your personal federal return with the IRS. The form contains Profit or Loss from Business in Part I, which is where you deduct expenses related to running your freelance business in Part II. You would also fill out Form W-9 to identify yourself in Part III of this section if it hasn't already been done so.