Freelance Taxes
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- estetic
About 6 months ago I started freelancing for a company in addition to my 9-5. Its tax time and I was wondering how I go about getting 'less screwed'... I received a 1099 and such and was wondering if I can fill out a Schedule C form without being a licensed/incorporated/LLC business...
Anyone have any recommended resources for this stuff??
Thanks.
- dropdown0
Get an accountant?
- seriously, if you don't know what you're doing, it's only gonna make things worse.dropdown
- it may come down to that...estetic
- it's worth the 150 dollars. (if you find a cheap one)akrokdesign
- +1000000 get an accountant.jamble
- think of it as the same way it makes sense for a business to hire a designer to do their graphics work. you want it done right, right?jazmine
- akrokdesign0
individual / sole p. ??
- estetic0
Yes.
- fugged0
I found myself in a similar situation, and finally just hired an accountant. Best thing I could have done. Not only did he do it right, but gave me the peace of mind that the IRS wasn't going to come after me.
They can also figure out your quarterly estimates and help you take advantage of all the deductions you can, without throwing up red flags to the IRS.
- Josev0
What dropdown said.
But, you can fill out a schedule C without being incorporated. You may want to get a business license in the city you live or work in. I got mine in Cambridge, MA and it was $26.00 for three years
- hellojeehae0
how much do you pay for an accountant. and where do i find them
- bulletfactory0
i'll have to look at my last bill, but their services are deductible on next year's taxes.
An accountant will know the ins and outs of deducting things like internet connection, a portion of your rent or mortgage for home office, depreciation on equipment and deductions of new equipment, all the way to gas, business meals etc. Also it's a good idea to pay quarterly taxes, since all or most of your the freelance income has not yet been taxed - I've been hit for a few grand in taxes which sucked. They know how to legally get you the best deal.
Oh, someone correct me if i'm wrong, but go to a tax professional. Anyone can give you tax advice, and figure your taxes (at least in my state), but don't have to guarantee any of their work by law.
A licensed CPA on the other hand will have to back their work legally (if you're audited or something), you're not left high and dry.
- woodyBatts0
My advice...
1. Get an accountant, always look to an expert
2. When you deposit an invoice place 33% in an account that you do not touch
3. Upgrade your equipment
4. Max out your retirement contributionsLast year I was royally screwed and I invested in an advisor. In the tax world there are lot of things that people don't do because they think it's too expensive, but the reality is, is that it lowers your tax burden.
For example having a 2 bedroom apartment allows you to write off 1 full bedroom for work space, where having a 1 bedroom you can only write off a small percent. Just an example.
- JazX0
You can combine it. There is a joint filing for LLC and personal. Actually, it's quite simple. Don't worry about it.
- yes, mine are figured together. (my 9-5 and freelance earnings)bulletfactory
- bingo, it's quite easy. however, there is a law that you can only make so much with your freelance gig.JazX
- it has to be less than your full-time gig. I am 100% sure of itJazX
- johndiggity0
if you got a 1099 they didn't withhold any taxes. you are responsible for paying your own state and federal, in addition to both your and their share of social security and medicare. and you need to pay these every 3 months (quarterly) or you will incur a penalty from the irs.
so you are probably going to owe the irs some money this year. if you are making over $1500 year on side work that doesn't get taxed, definitely invest in an accountant. meet with them and ask them to show you how to file estimated quarterly returns for state and federal.
and +1 about the 33% in the separate bank account. it's no fun when you get the letter from the irs about how you owe them $10k. this is speaking from experience.
- estetic0
thanks for the insight, seems I wont be too bad off this year, but for 2010 I need to get some of this in order.
- I think they're lenient with the penalties in the first year because you have no prior year to reference for the estimate.Josev
- AND, the IRS is not as bad as people make them out to be. They're easy to work with if you communicate with them. If you owe and cant pay they'll set up a payment plan. The thing to avoid is needless penalties.Josev
- owe and cant pay they'll set up a payment plan. The thing to avoid is needless penalties.Josev
- boobs0
Before you get an accountant, make the effort to go through a Schedule C on your own. This will tell you if you really need to have an accountant handle this task for you. If you don't have difficulty getting through the Schedule C on your own, and it all makes sense to you, you can probably do the taxes yourself, and save some dosh.
Obviously others have a different point of view. But I prefer to save the dosh, and do the taxes myself.
Also, it's easy to see, doing the taxes yourself, what sort of expenses and investments can be deducted, and at what rate. This aids tremendously in making future business decisions.
- 404NotFound0
If you have 1 1099 to deal with, and little to no expenses, use TurboTax. Also, on the quarterly thing, I think you only have to do that if end up paying in. I never file quarterly because I always get a refund.
I could be way off though. So seek professional opinion.