In today’s day and age, freelancing is growing to be just as popular as traditional work positions. Freelancing opens the door to many opportunities. It allows you to exercise greater control over your working hours and to generate attractive income. However, filing taxes can be challenging, especially if you’re a newbie freelancer.
So, here are some insider tips that will make tax preparation for freelance workers in 2023 easier and hassle-free for you:
Collect All Your Tax Forms
Preparing your tax documentation is the first important thing to do while/before filing your taxes. A freelancer receives Form 1099-NEC (Non-Employee Compensation) from a client who pays them $600 or more annually.
But, you don’t need to submit a record of your Form(s) 1099-NEC to the Internal Revenue Service (IRS) with your tax return. While filing your tax return, it’s mandatory to report the total amount of business income that you received, as reported on all your 1099 forms and beyond.
Ensure That You’re a Freelancer
Employers frequently pay individuals who are employees, under IRS rules, as self-employed workers. Because they are “free” from the burden of filing payroll reports and paying payroll taxes, doing this simplifies things for the employer. Unfortunately, this is incorrect.
The IRS should consider you an employee if you truly are one. This also applies to getting employee benefits and having payroll taxes paid for you. Generally, if the employer directs your work, pays for your tools or other expenditures, and treats you like a permanent employee, then you are an employee. You can visit the IRS website for further information.
Remember to File Applicable State and Local Taxes
You first might need business registration with your state or locality, based on the nature of your work. Registration is mandatory if you use a business name rather than your own name. You can hire income tax services for freelance workers to report your freelance income while filing your tax returns with the concerned authorities.
Wrapping Up
Tax preparation can be complex, and even a small mistake can lead to huge losses. If you are a newbie freelancer, you should take up expert tax guidance to avoid facing any issues and to simplify your tax filing work. Agro Accounting CPA provides affordable accounting for freelancers and income tax services that help with smoother tax preparation. So, visit agroaccounting.com today to learn more!
