A Freelancer's Guide to Taxes: Deductions, Quarters, and More
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Freelancing offers freedom and flexibility, but it also comes with unique tax responsibilities. Here's what every freelancer needs to know.
Self-Employment Tax
As a freelancer, you're responsible for both the employee and employer portions of Social Security and Medicare taxes — that's 15.3% on net earnings. The good news: half of this is deductible above the line.
Quarterly Estimated Payments
The IRS expects freelancers to pay taxes as they earn income. If you expect to owe $1,000 or more, make quarterly estimated payments. Use Form 1040-ES to calculate and pay online via IRS Direct Pay.
Top Deductions for Freelancers
Record Keeping Best Practices
Track every business expense in real time using accounting software. Keep digital copies of receipts. Separate personal and business bank accounts. Set aside 25-30% of every payment for taxes.
Hiring a Professional
A tax professional who understands freelance work can help you maximize deductions, avoid underpayment penalties, and plan for retirement. The cost of their services is also deductible.
Supreme Level Tax
Professional tax preparation, bookkeeping, and planning serving Santa Maria and the Central Coast.
This article is for informational purposes only and does not constitute professional tax advice. Consult a qualified tax professional for advice specific to your situation.
