Simple Tax Tips for the Freelancer

When you’re a freelancer, you get to enjoy plenty of freedom with your work. You can set your own hours, decide on who you work with, and everything in between. In fact, the only really challenging part of freelancing is paying your taxes.   

Special and sometimes complex tax rules apply to those who make their own money and act as their own bosses. For this reason, it’s a good idea to seek the help of a qualified financial professional who is used to working with the self-employed.

Aside from that, though, there are some tips you can follow to help you save money come tax time.

Deduct Every Expense You Can

To start with, you should deduct as many businesses expenses as possible from your taxable income. Doing so will enable you to report less income, which, in turn, will lower your tax bill.

Get creative about what you deduct, but do make sure you stay within the bounds of the tax laws. With that said, though, more things than you might imagine are deductible. You can deduct things like advertising costs, work-related travel costs, office furniture costs, business internet costs, and more.

If you’re ever in doubt about whether or not something can be deducted, check with your accountant. These professionals are also a good resource for helping you uncover deductions you might have missed.

Consider an IRA

When you’re self-employed, it sometimes feels like the IRS takes the majority of your income.

One way to keep more of your income safe from the IRS is to open up a traditional IRA.

With a traditional IRA, you won’t be subject to earning limits. With a Roth, on the other hand, you can’t make direct contributions if you earn more than $137,000 for single filers and $203,000 for joint filers. Thus, it’s typically best for freelancers to opt for the traditional option.

These are actually just a few of many helpful tips that freelancers can follow. A good accountant can help you to discover even more. As you can see, if you know how to work the system to your advantage, preferably with the right help, you won’t get hit quite so hard just for working in a way that you love.