Don’t Let Tax Season Catch You by Surprise: Tips for the Self-Employed
You love the idea of working for yourself… until tax season comes around.
Yeah. That pile of W-9s and receipts is a disaster.
When you work for yourself, you file taxes as an independent contractor — a self-employed taxpayer.
If you found yourself scrambling the last few months to pull together receipts and record income, we’ve got some tips to get everything in order for next year.
Professional Tax Preparers Are Your Friends
Step 1? Talk to a professional. If you can afford the fee (or find a volunteer), working with an accountant will make your life much easier.
That’s not just for tax season. Talk to a pro year-round to stay on track with quarterly taxes and deductible expenses.
If you think your taxes are too simple to justify the fee, just make sure you’re keeping good records. Keep your receipts, invoices and tax forms all in one place — preferably scanned and stored in a virtual folder on your computer, where the dog can’t eat them before next April.
Tax-Deductible Self-Employment Expenses
Which receipts do you need to keep?
- Your home office — by the square foot
- Furniture, rugs and the “Hang in there, baby” poster in your home office
- Your laptop, smart phone and software
- Your internet bill
- Business-related travel, conferences and meals
Can’t remember what a tax deduction is? We’ve got you covered.
Don’t Forget to Pay Your Share
Unfortunately — and counter to popular belief — self-employment isn’t one big tax-deduction party.
You have to pay your share first.
And don’t forget about the self-employment tax. You should pay an estimated tax to the IRS quarterly — including Social Security, Medicare and a self-employment tax — so you don’t have to foot the entire bill in April.
Just make sure you increase those payments if your income increases, so you don’t wind up with a nasty surprise.
When you’re ready to file next year, one of these eight free tax-filing sites may come in handy.
Your Turn: Do you file taxes as an independent contractor?
Dana Sitar (@danasitar) is a senior writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).