Tax Tips for Freelancers

Tax Tips for Freelancers

Well, it’s that time of year again: tax season! And for many freelancers, there is extra motivation to get tax returns in early: they can avoid sending in a separate fourth-quarter tax payment if they file by February 1.  While this deadline is coming up very fast, I know I for one put off filing every year while I was a freelancer. Maybe you are like I was and need some last-minute filing tips. If so, read on!

Please note that this article does not constitute professional tax advice but is based on the experiences of one former freelancer. It is highly recommended that freelancers and contract workers contact a tax professional if they have tax questions.

Quarterly Payments

Hopefully, you have pretty even income throughout the year. When I freelanced, I earned way more during certain months, which made doing my taxes so much more complicated. I hope that’s not the case for you! If it is, I really recommend getting professional help. Otherwise, you will be doing a ton of math to calculate what are called Annualized Estimated Tax Payments. In my experience, the online services can’t really be relied on to get this right. If you do plan on making the exact same tax payment for each quarter, just be sure you know you need to do this from the start, or you may be faced with a penalty at the end of the year. Even if you don’t technically need to make the quarterly payments (find out more about requirements here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes) it’s a good idea. That way, you won’t have a big tax bill at the end of the year, and you might even get a return.

Saving Receipts

Save receipts for everything! Any item that you might use for your business may be able to be deducted, depending on what it is. You might as well save anything that might be useful and go through it when you fill out your tax returns. For example, maybe you’re out to eat with your friends and you end up spending considerable time sharing information about running a small business or working as a freelancer. This becomes a potential business expense, and you should save your receipt!

Hire a Professional

Really, this is the best advice you can get. Especially if you have complicate expenses, work in more than one state, or have income from a variety of different types of work. Costs can vary, depending on how complex your situation is and how many states you need to file in, but you will probably save money in the long run, not to mention the stress of filing your own taxes. On top of that, many tax preparers are small-business owners themselves so you will be helping to support the entrepreneur economy and grow your professional network at the same time.

Tax Preparation Software I’ve Used

If you do want to file your taxes yourself, here are some of the experiences I’ve had doing that.

By hand!

Can you believe it? I used to do all my taxes by hand on physical forms. I did this when I first started freelancing because I wasn’t making a lot of money from it and didn’t want to pay the fees that online services were charging for anything beyond a standard 1040. I also had that pesky problem of uneven income that complicated everything. This was so tedious and un-fun, and I’m so glad there are more resources out there now for freelancers to do their taxes for free or low-cost.

TaxSlayer

I used this online filing software because it was affordable for my needs ($47 for the Self Employed package), and I appreciated the live chat and phone support. It was easy to use and revise my forms online, and the software walked me through the many different types of deductions I could have been eligible for. My only complaint was that the Premium Tax Credit section (for health insurance) was confusing and was too easy to skip over without realizing it.

H&R Block

United Way and H&R Block have teamed up to create MyFreeTaxes, a program that offers free online tax filing for those who make less than $66,000 per year. Unlike some other free tax filing products, this one has all the forms you need as a freelancer, and participants have access to H&R Block’s premium tax software. Highly recommended for anyone who fits the criteria. Go to https://www.myfreetaxes.com/ to learn more.

Other Recommended Resources

The Art of Numbers: Taxes and Bookkeeping Made Simple, Regional Arts and Culture Council

A workshop on taxes and bookkeeping for self-employed artists and creatives. Topics to be covered include self-employment tax, basic bookkeeping, tax-deductible expenses for self-employed artists, and tips on how to run a small business. There will be plenty of time for questions and answers so come prepared with any questions that you have regarding your specific experience! Led by Jenna Goldin, a Licensed Tax Return Preparer.

When: February 9, 2019

Where: Regional Arts and Culture Council, 411 NW Park Avenue, Suite 101, Portland, OR 97209

Cost: $25 for 3-hour workshop. If the cost is prohibitive, please contact Jae Yeun Choi at 503.823.5016 Register here

AARP Tax Assistance at Multnomah County Libraries

Individualized tax preparation assistance for those who are 50 years and older. They request you bring a photo ID, proof of Social Security Number, last year’s return, and any current tax documents.

When: various days throughout February, March, and April

Cost: Free More info here: https://multcolib.org/events/tax-help

PCMag’s 2019 Review of Tax Preparation Software:

An extensive review of the major players in tax prep software. This article lets you know which software includes phone and chat support, as well which provide all major IRS forms and schedules, which can be important for those who are self-employed.

https://www.pcmag.com/article2/0,2817,1904319,00.asp

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