Tax Tips For The Self-Employed

Posted on August 5, 2010
Filed Under Taxes | Leave a Comment

For anyone who is self-employed, it’s pretty obvious that working for oneself can be a lucrative endeavor. You have the luxury of being your own boss. With that comes the freedom to make decisions about when you work, who you work with and decisions about the day to day operations of your business or work. Unfortunately, you are probably aware that as a self-employed individual, filing taxes can be much more difficult and complicated. Whether you are a freelance writer, consultant or independent contractor, there are things you should know so that you do not set off red flags with the Internal Revenue Service (IRS) during next years tax season.

The first thing you will want to do is organize your freelance or independent income from other types. You will want to keep track of income reported on all Form 1099s. You will also want to keep track of all expenses related to your independent business this includes any supplies, advertising, repairs, legal expenses or other things required to do your work.

For example, if you get a website made or business cards printed in order to help promote what you do, keep track of those invoices. If you work from home, fill out Form 8829 so that you can calculate how much your home is used for business purposes and deduct that.

Set aside funds in order to pay taxes on how much you make from self-employment. You will likely be paying more than if you were traditionally employed because employers pay part of your Medicare and Social Security taxes. Unfortunately, you will be left to pay both sides of these taxes if you are self-employed.

According to the IRS, your service or business should make a profit three out of every five years of operation in order to qualify for tax write-offs. If not, you will be required to prove that your business is viable. If you find yourself facing a tax audit or other problem, find a profession who understands the complexities of self-employment taxes.

Guardian Tax Resolutions will help you obtain relief from the IRS today. Our professionals are experienced and qualified with significant expertise in resolving IRS tax problems.

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