As Kissimmee tax service experts we have seen that freelance work is incessantly gaining popularity. Many graduates prefer providing their services on freelance basis as it allows them to choose their own working hours and nature of work. Employers also prefer freelance workers as it translates into lesser expenditures for employee’s welfare.
Often a freelancer is paid directly for his services and therefore is solely responsible for doing his own income taxes. Income generated by the freelancer is not taxed in advance. A freelancer is liable to submit his own Kissimmee tax return to the IRS. Along with submission of income information, a freelancer is also responsible for accounting his income, business expenses, tax credits, deductions and related documentation. Here is a guide that will help you in filing income taxes for your freelance work:
- Self-employed persons are often taxed at a higher rate than an employed person. A self-employed person is usually taxed at a rate of 15.3 percent where as an employed person is taxed at almost half i.e. 7.65 percent.
- By law, employers are required to provide their employees with their 1099 form. The 1099 form provides details such as terms of employment and net gross salary. It is required by law that all employees are provided with such forms by January 31. In case, you haven’t received your forms by February 1st of the tax year, contact your employer.
- Keep a record of your invoices and receipts. Your tax return Kissimmee is filed on the basis of the invoices and receipts that you furnish. You can also claim tax deductions and credits if you showcase authentic receipts. Save receipts involving business expense payments, health insurance costs, home office rent, and cost of supplies.
- While filing for tax return obtain a 1099 form instead of W-2 form. W-2 forms are for a person who is employed. In case you are working as a freelancer, file your return using a 1099 form.
- Estimate your surplus. Surplus or profit is calculated by deducting profits from the earned revenues. If you have earned a profit of more than $400 from your freelance business, you are liable to pay taxes at the rate determined by the IRS.
- In case, you are unable to keep a track of your income, hire a tax accountant or a CPA who provides such tax services in Kissimmee.
- Tax preparation software such as QuickBooks can also be used to calculate your tax liability. With the help of such programs, you will be able to keep a track of your receipts and invoices, and expenses. This will allow you to file your return electronically.
- Deductions in tax liability are legal reductions provided by the IRS and can be found in Part II of C schedule. Deductions can greatly reduce your tax burden. For instance, you can reduce your rent expense if you work from home/office at home.
- If you are unable to keep up with your receipts and payments, consider paying your taxes on quarterly basis. You can avail this feature by submitting a 1040-ES form to the IRS.
If you need more information about our accounting and tax services in Kissimmee, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.