Tax preparation tips for freelancers

In today’s volatile workplace, where finding a financially rewarding job has become more and more difficult, people are starting to work as freelancers as a gateway to independence and professional development. Some fields, such as web development, content writing, online marketing and website design are especially profitable and they can become an excellent alternative to working ten hours a day in a cubicle. However, freelancing is not without its challenges, especially when you have to deal with taxes. Some self employed individuals choose to do their Tucson taxes themselves to save money, but this isn’t always the good course of action. Here are some tips to make tax filing easier.

Be organized

 

Whether you work with a tax preparer or not, you need to stay organized and keep records of all your transactions, contracts, invoices and work-related documents. Few people realize how complex and complicated taxes can be when they are employed for someone else and have a shock when they have to do them themselves. You should keep all your documents in folders and preferably arrange them by the month they were released. This way, they are easier to find when you do your taxes or when you receive an audit notification.

 

Work with a tax preparer

 

Freelancing often pays off a few good months after you start and can a bit challenging at the beginning, when you have to work overtime to get as many clients as possible and prove yourself. If you are overwhelmed with work or lack tax knowledge completely, it’s better to work with a qualified tax preparer who knows exactly what and how to report. Doing this is beneficial at any stage of your career. In the beginning, the preparer will show you which forms are important and why and give you some tips and tricks on how to reduce your taxes. As you get more clients and also earn more, working with a preparer because your financial situation becomes more complex.

 

Claim tax deductions

 

Fortunately, working as a freelancer makes you eligible for several tax deductions. For example, you may be able to deduct some utilities and equipment if you work from home through form 8829. If you use a freelancing website with paid membership to find clients, this membership fee may also be deducted, which is a great benefit, because you can hunt more jobs. One risk that freelancer often take is working with employers that fail to return their calls or use their work without paying the invoice. If this happens, you might be able to deduct unpaid invoices, but you should hire an experienced preparer first, because the process can be a bit complicated.