Tax season is here and it’s time to start thinking about filing your return. However, if you’re self-employed or working as a freelancer, tax prep may not be as simple as you think. Michael C. Davis, CPA in Stow, OH, wants to help you better prepare for filing your taxes. Below, he explains what freelancers need to know when it comes to doing so. 

A Tax Prep Guide for Freelancers

1. You Must Report All of Your Income Earned

Whether you’ve worked as a contractor for a single employer or earned money from dozens of clients throughout the year, all of those earnings must be reported to the IRS. Generally, your clients are expected to send you a 1099-MISC form when they pay you over $600 during the year. However, for smaller clients or one-off gigs, you may not receive any documentation. Keep track of your earnings in a spreadsheet throughout the year so you have a firm idea of how much you truly earned.

2. You’re Responsible for All Taxes

As a regular employee, your employer pays a portion of your Social Security and Medicare taxes on top of the amounts automatically withheld from your paychecks. However, as a freelancer, you’re responsible for paying the full amount. For most individuals, the standard rate is 15.3 percent of your income for the year. On top of the standard self-employment tax, you’ll be responsible for paying both federal and state income tax on your earnings, minus any deductions you can take.

3. Make the Most of Your Deductions

As a business owner, you’re entitled to many deductions that you would not get if you were working for an employer. If you work from home in a dedicated office, you may be able to deduct a portion of your rent and utilities as well as the cost of office supplies needed to conduct your business. Keep in mind that deductions can be a bit confusing and hiring an accountant to help you with your tax prep will help you get the most out of them, reducing your tax liability for the year.

Tax prep shouldn’t be a source of stress at the start of your business year. If you’re a freelancer, work with an experienced accountant. Michael C. Davis, CPA will help you get the most out of your return, whether you’ve been self-employed for years or just started freelancing. Learn more about his services online and call (330) 376-1099 to schedule a consultation.