Freelance income tax question

[Amy]

Don't forget about state requirements. States usually track IRS provisions on procedural stuff.

 

[Joe Williams]

Yeah. You're supposed to pay as you go. There are penalties for underpayment. That holds, too, if you aren't self-employed, but you don't have your employer withhold enough.

Most people just make quarterly payments that add up to 100 percent of their previous year's taxes to avoid the penalty.

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First year I had a fair amount of freelance, I just paid what I owed. The next year, I got a letter from IRS saying I had to make quarterly payments or face a penalty. The third year, I had to pay a penalty and from that point on made quarterly payments unless my income (and day-job withholding) bumped up enough to reach that "100 percent of previous year" threshold.

 

[stix]

Now that I'm doing freelance work, I have to make estimated quarterly tax payments.

Can anyone recommend a good online calculator to figure out how much I need to pay?

With the IRS, do I pay income tax and Social Security (or self-employment tax) separately or are they lumped together?

Find a CPA to guide you. They know all tax laws and can tell you what to do.

It's a as worth it for me when both my wife and were working as freelancers/contractors. It relieves the stress of doing all that yourself. Just keep track of all your expenses, they'll advise the rest.

 

[icoverbucks]

Deduct everything you do ... all travel from your house to anything ... that mileage adds up .... if your home is your office (and this is in broad terms) you can deduct the percentage of square footage of overall house for your office space in terms of your phone bills, cable (if needed for work), gas, electric, water and trash

Basically if you have a 2000 square foot house and your office is a 20x10 foot room, 200 square feet, you ought to be able to deduct 10 percent of those bills ... your accountant can help you

But between mileage and utilities and any other un-reimbursed expenses (hotels, meals on road trips etc) I have been able to knock down my tax bill quite a bit

Every little bit helps