Are you a freelancer? Instead of working a traditional 9-5 job, you may prefer having a position where you can work freely at your own pace and around your own hectic schedule. Although being a freelancer is convenient and surely has its perks, it may be a bit more challenging during tax time. If you do not know how to properly file taxes as a freelancer, there are several things you should be aware of before you start the filing process:
Request 1099-Misc Forms
If you have worked as a freelancer for several companies throughout the year, some of those companies may provide 1099-Misc forms. These forms would provide details about the amount of money you have earned throughout the tax year. The forms would also show whether any taxes were taken out of the amount you earned or not. If taxes were not taken from your income, there is a good chance you may owe some money back to the IRS. Although it is common for companies to provide 1099-Misc forms to their independent contractors, some companies may not provide this form, but you will still need to report all of the earnings you have received.
Keep Documents of Your Finances
Because some companies do not always provide 1099-Misc forms, it is important to keep documentation of your earnings. How do you get paid? Whether you are getting paid via PayPal, bank account, or some other method is it important to have statements that show how much money you received for working as a freelancer. If you have receipts, you should keep them until you are ready to file your taxes, too. Those receipts could come in handy when it is time for you to file.
Work With a Tax Preparer
Filing taxes as a freelancer is slightly more complicated than filing as an individual person who works a traditional job. If you are feeling confused about the situation, work with a tax preparer who can help you with the filing process. The tax preparer would be able to include your income from all sources and determine whether you will owe money or receive a refund. It is possible to receive a refund if you have a number of deductions, but it all depends on your personal situation. If you have important questions relating to the filing process, the preparer could answer them for you.
Even if you work as a freelancer, you still have to file your taxes and report all of the income you have earned. It may seem a bit frustrating and difficult, but the tax preparer could help you out to ensure that you avoid having any problems with the IRS.
Contact a company like Alexander & Associates CPA for more information and assistance.