Tax Tips for the Self Employed
Being self-employed can be a blessing yet when tax season rolls around it can be more of a curse. Self – employed individuals are responsible for paying their taxes, with estimated tax payments, since they are the only one handing their incomes. Not paying taxes when self-employed comes with large penalties. It may be complicated filing taxes but it is something that must be done. Therefore, today we are providing you with self-employed tax tips so you will be prepared this year when tax season rolls around.
Take All of Your Tax Write Offs
Many self – employed individuals fear filing their taxes because they know they will have to pay a large amount of money to the IRS. However, there are dozens of tax write offs that you can deduct, if you qualify, to lower the amount of money you will have to pay in taxes.
Keep Your Receipts
If you plan to utilize tax write offs, it is important that you keep all of your receipts. This protects you in the event that you are audited. Never be afraid to take deductions, such as the Home Office Deduction, just make sure that you have receipts and are honest when calculating your totals.
Make Your Estimated Payments
Failing to make your estimated payments throughout the year can result in a tax penalty. Keep in mind unlike traditional employees you are not having taxes taken from your pay automatically. It is suggested that you keep a fraction set aside in a dedicated bank account from each payment so when it is time to pay taxes you have majority, if not all of the money, readily available. Once you file taxes for the first time you will have an idea of how much money needs to be set aside.
Keep Great Income Records
One of the main reasons self-employed individuals find it so stressful when tax season comes around is because their income records are a mess. You should get in the habit of keeping your income records in an orderly fashion so when tax season kicks in everything is easy to read and calculate.
Hire a CPA or Use High Quality Tax Software
When it is time to prepare your taxes, go to a CPA or use high quality tax software. This way you can be aware of all of the deductions that you qualify for and lower your balance due to Uncle Sam.
When you are self-employed, you cannot avoid paying taxes. However, you can make doing so less stressful by following the advice that we have provided you in this article today. Be prepared for tax season this year and keep the maximum amount of your hard-earned money.
Huddleston Tax CPAs are Seattle CPAs!