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How do taxes work for freelancers

Community Guru
Jennifer M Member Since: May 17, 2015
11 of 14

Turbo Tax is pretty good too for info.

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Mary W Member Since: Nov 10, 2014
12 of 14

I use the Turbo Tax for Self-Employed people when doing my taxes.  Helps me make sure I get all the business deductions I deserve.

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Jennifer M Member Since: May 17, 2015
13 of 14

Me too. I realized that I was paying too much years before turbo tax but I'm too lazy to redo them from previous years.

Community Guru
Samantha S Member Since: Jun 23, 2016
14 of 14

Hi Lydia, if you are a freelancer or self-employed then you are a company. Taxwise, you would be a sole proprietor unless you organized as something else. I am not a tax expert, so this isn't professional advice.

 

The IRS has a pretty good section on the "sharing economy", it is written by IRS staff so some of it is tedious to read. The page seems to be directed at people with side gigs like driving for Lyft or renting through Air BnB, but much of it applies to part or full-time freelancers. https://www.irs.gov/businesses/small-businesses-self-employed/sharing-economy-tax-center

 

I have small amounts of income from a bunch of different sources and have different ways I track different income sources. I only actually received one 1099 out more than a dozen income sources. For Upwork, I use the earnings by client report adjusted for the tax year. I actually opened a separate business banking account to make it easier to keep track of my business income and expenses. I put 25%  of my earnings into a connected savings account to save for taxes. Of course, how much to set aside depends on your tax bracket, but it worked for me since I had a lot of business expenses last year (replacing my laptop, attending a conference, etc.) I used Quickbooks Self Employed to keep me aware of income, expenses and estimated taxes. I think I will cancel that subscription, but it was well worth it my first year as the estimates were pretty accurate. 

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