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Taxes + Freelance 2525 Responses
Last post: 2 years, 3 months ago | Thread started: Feb 3, 11, 8:12 a.m.
- duckseason
2010 was the first year I did freelance work.
I put away 30% of everything I made, expecting to pay roughly that much in taxes. I started preparing my taxes last night, the same way I've done in previous years, at the end of it all I came up with an amount owed that was roughly 60% of what I made.It's possible that I totally fucked something up in the process, as I've never had to deal with the self-employed income bit; however, from what I could tell in my double checking, I filled out everything properly.
Anyone have any tips, insight, things I may have overlooked, accountants in the NYC area?
- Feb 3, 11, 8:12 a.m. – Permalink
- pinkfloyd
30% seems more accurate. The 60% seems way too high to pay taxes on. I recommend getting a accountant. They'll help you find what you can write off. You can also write off what you're paying your accountant for next year if you plan to freelance as well.
- Dog-earFeb 3, 11, 8:19 a.m. – Permalink
- 404NotFound
Ya, it should be around 30%, before any expense right offs. Something is fucked up.
- Dog-earFeb 3, 11, 8:22 a.m. – Permalink
- duckseason
The freelance work I did wasn't my primary source of income.
I just fell into all the work - friends with friends that needed this or that done. At the end of the year it wound up being a fairly significant chunk of change. That being said, I haven't paid any sort of tax up to this point. As far as what I spent on my "business"... there really wasn't anything, unless I start getting into transportation and meals n shit.- Dog-earFeb 3, 11, 8:30 a.m. – Permalink
- JSK
Things I have learned from my IRS audit:
Don't trust your accountant
Understand basics of what can be deducted
Use a separate credit card for expenses (get a corp card if you are inc)
Use credit card as much as possible (this can be used as receipt if you use card like AMEX which details it out)
Do your own taxes, itemize the list and give it to your accountant
Stop going to an accountant if they tell you their clients been audited.- Dog-earFeb 3, 11, 8:33 a.m. – Permalink
- pinkfloyd
From my memory, it works something like this.
Let's say you made 1000 in 2010 in freelancing. You would owe something around 333 in taxes.
Let's say, you had related expenses around 400. Subtract your expense from the total amount of freelance you earned = 600
Then you should owe around 33% of 600 instead of the 1000.
If you freelance, you should really try to take advantage of the write offs. The government is very supportive of freelancers and small business since they are the backbone of our country.
- Dog-earFeb 3, 11, 8:38 a.m. – Permalink
- ETM
Write offs are not always a literal one to one dollar value. $400 in expenses doesn't automatically mean reducing total income by $400 dollars.
Granted, I am coming at it from Canadian Tax law, but some things to be wary of are:
Wardrobe is not a write-off despite many people doing it (They'll get caught some day). Meals are also a common mistake, when you buy a client a meal you can only claim their portion of the meal bill, not yours. You have to eat anyway, you're not getting a write off to survive. Also tips can't be claimed either. Again maybe that's only Canada.
- Dog-earFeb 3, 11, 9:14 a.m. – Permalink
- pinkfloyd
I think the IRS is asking some people to wait on doing their taxes this year? Has anyone heard about this?
Also, I heard the IRS can't audit you if it was past 4 years ago, but then I heard that they can go back as far as they want? Can someone confirm this?
- Dog-earFeb 3, 11, 10:14 a.m. – Permalink
- JSK
The last point is not valid. Audits are often random and do not always reflect anything on the tax preparer.
ETMIt is valid. This is from the IRS auditor. Once they flag an accountant or tax preparer whom their client gets audited, they look at other clients of the same.
I got audited for past 2 years because I was with this accountant for this time.
If you file it on a personal level, it is a random selection but make sure that audit is not frequent with the accountant.
- Dog-earFeb 3, 11, 10:17 a.m. – Permalink
- ETM
Why wife is a tax accountant (again Canada though) and has had client's audited. There's never any problems, random audits checking for backups of claims etc. I don't believe ever the same client twice. But then again, she doesn't ever take on a client who is trying to do anything not above board, so there shouldn't be anything significant discovered in a audit of her work anyway.
- Dog-earFeb 3, 11, 10:25 a.m. – Permalink
