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The Freelancer Tax Guide For 2016

STHE FREELANCER ТAX TAX GUIDE FOR 2016 20 NUMBERS, FACTS, AND TIPS EVERY SELF- EMPLOYED AMERICAN NEEDS TO KNOW 3.1 MILLION US FACEBOOK USERS LIST THEIR JOB AS FREELANCE OR SELF-EMPLOYED. "THE FREELANCER'S LIFE IS TO BE ENVIED: ALARM CLOCK-FREE, COMMUTE-FREE, BUSINESS ATTIRE-FREE...WELL, EXCEPT FOR ONE THING: TAXES." LAURA SHIN , FORBES CONTRIBUTOR SELF-EMPLOYED PEOPLE PAY DOUBLE TAXES As a self-employed person, you have to pay both the employer and employee halves of Social Security/Medicare taxes. Self- Employed: 15.3% Employee: 7.65% DON'T FORGET QUARTERLY PAYMENTS Since taxes aren't automatically deducted from your paycheck, freelancers and other self-employed individuals should make quarterly estimated tax payments. The due dates are: April 15 June 15 Jan 15 Sept 15 CREATE A BUDGET Create and follow a budget to help you stay on top of variable income, expenses, and tax payments. Carefully following a budget can help you avoid unpleasant surprises come tax season. KNOW A 1099 IS REQUIRED If you pay a contractor more than $600 in the calendar year, you are often required 1099 to issue them a 1099-MISC form. These are MISC INCOME ................... typically due to be sent out to the contrac- SPECIAL NOTE tor by January 31 and then have to be filed with the IRS and state. And in most cases, If you accept payments via Paypal or other online payment services, you may receive a 1099-K from Paypal reflecting that income. any client who pays you more than $600 in a calendar year should provide you with a 1099 form reporting the income. There are exceptions for certain corporate setups, but make sure you have received all your 1099s before filing your income taxes. CAREFULLY RECORD ALL EXPENSES %24 Business expenses reduce your taxable income, so it's important that you carefully record every expense. KNOW WHAT YOU CAN DEDUCT Deductions can often include things you were already spending money on. Here are a few common deductions that may apply to you: Office supplies and equipment Travel Internet Phone Advertising and meals Health insurance Professional Bank fees Software costs Computers, printers, and other electronics premiums development PROTECT YOURSELF FROM LIABILITY Once you become self-employed, you are subject to much greater liability than an employee would be. Follow these three steps to protect yourself: 3. Form an LLC or Stay compliant by keeping Have solid corporate minutes, not insurance corporation co-mingling funds, etc. DON'T FORGET "OTHER" TAXES Depending on your situation and where you live, you may be liable for additional state and local taxes, such as business registration taxes, environmental taxes, payroll taxes, sales tax remittance, etc. INVESTIGATE YOUR LEGAL ENTITY OPTIONS If your business is a full-time venture and does well, a change of corporate setup can have huge tax benefits. Common options include: Sole Proprietor LLC C-Corp S-Corp BANK BALANCES + BUSINESS PROFIT It can be a nasty surprise to find out you owe taxes on money you don't have, but that's a common scenario for business owners. Loan repayments, personal expenses, tax payments, part of business meal expenses estimated - all of these reduce cash reserves but do not reduce your taxable profit. MANAGE YOUR BOOKS WELL Knowledge is power. You need to have your books up to date at all times during the year with the ability to quickly at least run profit and loss reports. Use accounting software like Quickbooks or hire a qualified bookkeeper to do it. PLAN FOR RETIREMENT There isn't an employer sponsored 401k when you're self- employed. You have to set aside the money yourself and plan more proactively to save for retirement. LOG YOUR MILES Driving your car to client meetings or other business engagements is a deductible expense. You can deduct $0.54 for every business mile driven. $259.20 The amount you can deduct for a 480 mile round trip from New York City to Washington, DC for a business meeting. HIRE A TAX PROFESSIONAL The tax laws in the US are far from simple, and with the added complexity being The IRS tax code is self-employed brings, it's almost always best to hire a tax professional to help you. 70,000+ pages GIVE YOUR KIDS EXTRA SPENDING CASH You can save money on taxes by hiring your kids to work for your business. It's a deduction for you, and your kids will pay much lower (or no) income taxes on their earnings. The laws regarding chil- dren working at a family business vary state by state, so check yours to see what regulations apply. MAKE 2016 YOUR BEST FREELANCING YEAR YET Once you've finished paying your taxes, try these 5 social media tips to find new clients and increase your revenue in 2016. ВEА СНOOSE USE JOIN FACEBOOK APPLY FOR VALUED YOUR SOCIAL TWITTER & LINKEDIN LINKEDIN RESOURCE SITES SEARCH GROUPS PROFINDER in Start with Facebook, then add 1-3 more, Focus first Remember, focus This new tool Find people who are looking for help in your area of expertise. on helping, not selling. connects businesses on helping more than selling. such as Twitter or with local freelancers Pinterest. SOURCES HTTPS://Www.IRS.GOV/TAXTOPICS/TC751.HTML HTTPS://WWW.IRS.GOV/BUSINESSES/SMALL-BUSINESSES-&-SELF-EMPLOYED/SELF-EMPLOYMENT-TAX-SOCIAL-SECURITY- AND-MEDICARE-TAXES HTTP://WwW.BLS.GOV/WEBAPPS/LEGACY/CPSATAB9.HTM HITP://WWW.WASHINGTONEXAMINER.COMLOOK-AT-HOW-MANY-PAGES-ARE-IN-THE-FEDERAL-TAX-CODE/ARTICLE/ 2563032 HTTP://WwW.FORBES.COM/SITES/LAURASHIN/2014/07/18/FREELANCERS-HERES-HOW-TO-DO-YOUR-TAXES/ MICAH FRAIM, CPA FRAIMCPA.COM %24 %24 %24

The Freelancer Tax Guide For 2016

shared by mrchibolin on Apr 28
Are you a freelancer or other self-employed worker? With the freelance economy on the rise, and as more independent workers land opportunities, this resource aims to help freelancers better manage the...


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