Disclaimer: I am not a tax expert. I am merely sharing information that I have used when filing my taxes and seek to pass this information along to others.
Filing taxes as a freelancer is a more challenging process than filing traditionally. But there are some great benefits to being a freelancer as well!
I’ve been filing my taxes on my own. I started a few years before I became a full-time freelancer, and that experience helped give me a head start on filing as a freelancer. I use HR Block, and the software walks me through every step of the way. It’s very user-friendly!
Consult with a tax expert if you have no experience filing taxes or are unsure about the process.
Below are some tips that I use that have helped me succeed in filing taxes as a freelancer. These are tips you can use if you file on your own or with a tax expert.
Take Advantage of Write-Offs
As a freelancer, you’ll file your taxes with a 1099 form. The beauty of filing 1099 is that you can write off business-related expenses and get money back for them. Score!
Here are a few examples of write-offs you might have:
- Health Insurance Premiums
- Home Office Deduction
- Work Supplies
- Cell Phone Cost
- Commissions or Fees
- Depreciation of Assets
You can write off any items or services that you use that directly relate to your business operations. Take advantage of that! Freelancing is a business that you’ve invested your money in.
Keep A “Paper” Trail
Throughout the year, you’ll want to keep track of these receipts. There are two important reasons you’ll want to do this.
Having all of your receipts in one place makes the tax filing process much easier and quicker. You don’t have to go searching for everything. Secondly, you will need proof of your write-offs in case the IRS audits you. Again, having everything readily available is essential.
My tried-and-true method for receipt saving is digital. I have a folder in my Google Drive where I keep all of my receipts. Anytime I make a business-related purchase, I save the receipt.
Most of my receipts are digital anyway, so I’ll download them and save them in the folder. If you have physical receipts you can digitize them. Take a picture of the receipt with the camera on your phone and upload it to your Google folder. So easy!
Save For Tax Time
As a freelancer, you aren’t paying taxes regularly. When tax time comes, that’s when you’ll have to pay them. Sometimes with write-offs and other credits, you end up breaking even. But, you want to be prepared to pay in.
As a general rule, it’s a good idea to save a percentage of your earnings. I save 10% of my monthly income. I have a dedicated savings account where I deposit these funds each month. When tax time comes, I’m prepared to pay in if needed.
If I don’t have to pay in, or I don’t need to pay in as much as I put aside, I consider whatever is leftover my “fun money.” Essentially, I give myself a refund! It’s always best to prepare, so save a bit of money for taxes!
Ask For Help If You Need It
I love the freedom of filing taxes on my own. I find the tools I use very easy to follow, and it gives me the luxury of completing them on my own. I hope these tips help you prepare for taxes whether you choose to file independently or with a tax expert.
Please remember, if you are struggling or unsure about what you’re doing, seek out advice from an expert.