With the world moving towards a more and more hands off approach to work, meaning that more work is being outsourced and completed thanks to the global network known as the internet, there are likewise an increasing number of individuals who are working as freelancers.
Freelancer jobs in America have grown exponentially in the past decade as more and more individuals are opting to perform their work or offer their services to different companies from the comfort of their own home or office.
Deduction vs. Credit - First, it is important to understand that there are 2 primary ways to reduce the amount of taxes you pay. Deductions and credits both take money off the amount of taxable income but they are slightly different in how they affect how much money you save.
In a company or organization, it is most often the case that the employer will withhold a certain percentage from each paycheck so that a person can fill out a W2 tax form during the tax season and pay their taxes from those withheld funds, but for freelancer this is not the case.
What Deductions Should I Look For? - The deductions that you qualify for will differ for every individual. It is recommended that you speak to a professional who understands tax law and the intricacies of how it works. Many people choose to do their own taxes each year, and collectively they miss out on millions of dollars by neglecting to deduct some of the following items.
The first tip that freelancers who are trying to report and keep track of their taxes need to know is that there are different forms of 1099s that are used to report various types of income from freelance work and knowing which form to fill out and report with will be the first step in successfully completing your tax filings.
For example, form 1099-INT is a 1099 that is used for reporting interest income received and form 1099-DIV is the form used for reporting gains from stocks and mutual funds; but these are only two types of 1099 forms and the form or forms you will need to accurately report on your taxes may be another type, so figuring out which forms you will need is the first step in filing taxes as a freelancer.
Mileage - This is a pretty big one that many people fail to take advantage of. You are allowed to take a per mile deduction for any miles you put on your car as long as it is for business, moving, or charitable work. The rate per mile varies for each of these so check the federal guidelines to see how much of a deduction you get.
There are several more deductions that you can claim depending on your situation. The best way to reduce your taxes and get a better return is to take the time to learn which deductions and credits you qualify for and take advantage of each one.
Freelancer jobs in America have grown exponentially in the past decade as more and more individuals are opting to perform their work or offer their services to different companies from the comfort of their own home or office.
Deduction vs. Credit - First, it is important to understand that there are 2 primary ways to reduce the amount of taxes you pay. Deductions and credits both take money off the amount of taxable income but they are slightly different in how they affect how much money you save.
In a company or organization, it is most often the case that the employer will withhold a certain percentage from each paycheck so that a person can fill out a W2 tax form during the tax season and pay their taxes from those withheld funds, but for freelancer this is not the case.
What Deductions Should I Look For? - The deductions that you qualify for will differ for every individual. It is recommended that you speak to a professional who understands tax law and the intricacies of how it works. Many people choose to do their own taxes each year, and collectively they miss out on millions of dollars by neglecting to deduct some of the following items.
The first tip that freelancers who are trying to report and keep track of their taxes need to know is that there are different forms of 1099s that are used to report various types of income from freelance work and knowing which form to fill out and report with will be the first step in successfully completing your tax filings.
For example, form 1099-INT is a 1099 that is used for reporting interest income received and form 1099-DIV is the form used for reporting gains from stocks and mutual funds; but these are only two types of 1099 forms and the form or forms you will need to accurately report on your taxes may be another type, so figuring out which forms you will need is the first step in filing taxes as a freelancer.
Mileage - This is a pretty big one that many people fail to take advantage of. You are allowed to take a per mile deduction for any miles you put on your car as long as it is for business, moving, or charitable work. The rate per mile varies for each of these so check the federal guidelines to see how much of a deduction you get.
There are several more deductions that you can claim depending on your situation. The best way to reduce your taxes and get a better return is to take the time to learn which deductions and credits you qualify for and take advantage of each one.
About the Author:
Tax Crisis Institute provides what you need to resolve any collection problems you have with the Internal Revenue Service or any other taxing authority. We can stop them from placing a tax levy on your wages, bank accounts, pensions, and savings. We can prevent them from seizing your house or business. We will give you tax debt help just as we have for many others. We will fight to protect you!
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