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.