Tax season is almost here, which can be a stressful time for many, especially those who work freelance. When you’re a freelance worker, filing your income tax return can be challenging when compared to filing when you have traditional employment. If you work solely as a freelancer, or you make extra income doing freelance work, it’s helpful to get your paperwork in order ahead of time so you can ensure you have everything you need to file before the deadline.
Important documentation
When you complete freelance work, you generally do not receive a W-2 form. Instead, your income will most likely be reported on Form 1099-MISC or 1099-NEC. If you work for various clients or have more than one income stream, you may have many 1099 forms to keep track of. Some freelance workers may also have 1099-K forms, which can come from certain types of payment providers. Consider all the work you completed in the previous year to ensure you have forms from each job to accurately report your income. Not doing so could result in legal issues with the IRS.
Filing your tax returns
Freelance workers are considered self-employed by the IRS. This means you may be subject to paying a self-employment tax to cover Medicare and Social Security since you don’t have an employer to automatically withhold those funds. As a self-employed worker, you may be able to deduct many expenses related to your work. These may include travel expenses, costs for operating a home office, equipment costs, and other business-related expenses. If you’re unsure about where to start, consider working with an accountant. Filing taxes as a freelance worker is not always straightforward, so consulting a tax professional can relieve some of the stress associated with filing your tax returns.
As tax season approaches, those new to freelance work may have some questions or concerns about filing their income tax returns. If you’re worried about the process, don’t hesitate to seek advice from an accountant. Otherwise, if you have your documents in order, ensure that you report all your income, and you follow the appropriate tax laws, you should have no issue filing your tax return on time, preventing legal or financial repercussions from the IRS.
