I am new to this whole thing, just graduated college. So I was wondering how taxes for this work. I don’t have a company or anything, I am just working to get some extra cash on the side.
Does Upwork take out income tax? or is that something I have to do at the end of the tax season?
Also, do I need to fill out any forms to say I am a freelancer? The w9 asked for a business name so i just put my actual name.
Do I get a w2 from Upwork at the end of the year?
I am clueless to any of this. I hardly understand my own taxes from my day job.
if you make more than $20k they send you a 1099. You'll have to pay taxes on the income on tax day. There is a lot of info you can read online but no Upwork doesn't take any money out you're responsible for the taxes.
You can try NOT paying the taxes owed on Upwork earnings, but I don't recommend doing that because you are likely to be caught and then owe interest and penalties to the IRS.
Don't use bank statements. Use the reports you can generate from within the Upwork Reports menu. You can export complete records of income for the year, showing the fees you pay. That is all you need. If you don't have a 1099 you can file taxes using these reports.
For authoritative tax advice, talk to a tax professional or accountant. The only thing you can get here is non-authoritative advice which may or may not apply to your particular situation.
@Lydia R wrote:
Thanks, How would you show it on your taxes if you do not have a 1099? do you just use bank statements?
I use Upwork reports and add it up because that's the amount Upwork will report to the IRS. If I don't get a 1099, I just put it on the extra earned column. As long as you claim it, you're fine.
I did get a check back from them once cuz I made a mistake and paid too much. That was cool. Bank error in your favor. When does that ever happen?
Either way. You can report the gross amount and report the UW fees as a business expense, or you can report the net amount. Depends on whether you have a lot of business expenses to claim. If you are in the US, I highly recommend the Turbo Tax version for self-employed and small businesses. It's rather fool-proof (and the cost is a business expense)