5 Things All Freelancers Need to Know About Taxes

Topic: The Basics

A recent study by Intuit (the company behind Turbo Tax) projects 40% of the U.S. workforce will receive at least 25% of their income from freelance jobs by 2010. They estimate that to mean there will be 7.6 million freelancers - 4x the workforce of Walmart Welcome to the “Gig Economy.” Those are staggering numbers and if you think half of them have difficulties with their taxes (and that’s probably conservative) then a huge chunk of Americans are in troubled waters when April 15th rolls around.  And that’s why we’re here, folks!  So let’s start with the absolute basics.

  1. Freelancers are Businesses - LLC or no LLC the IRS expects a lot more out of you now.

  2. Quarterly Taxes - almost all freelancers need to pay them. Never heard of them? Get on it!

  3. Deductible/Allowable Expenses - the IRS says the standard is something “ordinary and necessary” to do with your business but in the real world nothing is legit without proper records so…

  4. Proper Record-keeping - not all of us are accountants so at the very least you need: 1.receipts/proof of payment, 2. amount, 3. date, 4. location, and 5. business purpose (including who you are with if it’s a meal/entertainment expense & what you discussed.)

  5. Don’t Freak! - Owe taxes? You’re not alone. Have no idea where to start? Welcome to the club. It’s okay. Governments understand and they’re willing to work with you. Being a responsible taxpayer goes a long way. Get educated and take control of your business.