OK, so this has been my first experience as a freelancer. I love my job, but the tax part is horrible! Can anyone give me tips on how best to do taxes? Like, I have 3 different jobs, totally different projects, but does all my income and write-offs and taxes go in the same basket? How do I split them? Or do I have to? Please Help! If you have any resources for me to refer that would be great, as I am having a hard time finding info on this. Which is crazy, bc one of my clients wrote a documentary about taxes.....
There is no single way to do your taxes.
You live in the United States. There are many options.
Some contractors just treat their Upwork income the same as they would if they received the money from a brick-and-mortar employer.
But the truth is, an Upwork contractor isn't really an employee, but is a small business.
In fact, you don't need treat Upwork funds as wages at all, because the money is also a business-to-business financial transaction in which one business (the client) purchases a service (from the contractor).
Upwork is going to provide minimal information about how to pay your taxes, because they are concerned about the liability they would incur if they steered people the wrong way or if somebody messed up and blamed them. Generally speaking Upwork will recommend that you consult your local tax authorities. You can also hire tax consultants on Upwork. You can also just read IRS document and figure it out yourself.
But whatever you do, don't take tax advice from me, because I'm not a tax expert.
Eni M wrote:
For real Sir small business?!
Small business that takes millions of cash?
What do you mean by that Sir? Upwork takes 20% from our jobs. Then another VAT too. The system tax is TERRIBLE. It would be great to change something in the tax system. We’re more losing money working for hours then saving some money.
You seem to be very confused. Upwork charges a fee because they're providing you with a service - this is how they, as a company, earn money - it has nothing to do with your taxes. If you feel that you're paying too much tax and/or VAT, then that's something that you'll have to take up with your government.
Here is bit of info to help you with your taxes.
It is true you are not an employee of UpWork. As a freelancer, you are a contractor.
As a contractor, you should receive a 1099 for any jobs totaling $600 or more from your clients. It is their responsibilty to send that you you. You'll report that income on the designated section of the form.
Any income under $600 you'll report on a Schedule C, which is for profit or loss on a business. As a freelance contractor, you are a 'business.'
You can access all your earnings through your UpWork reports and see a list of your earnings by client. That is where you can determine how much money to report as freelance/contractor earnings on Schedule C.
I believe you report it as a lump sum, and do not have to list each job separately.
Do not include any jobs that earned more than $600 on schedule C. Those clients should have sent you a 1099, and they'll be accounted for on a different form.
You can deduct your Upwork fee as a business expense, if you like.
Do some some searches online to verify this info is correct. though. I always recheck to make sure I'm remembering correctly.
I file my taxes online on a free site, and have not had any problems. It's not too difficult.
Hello! This is me, the original poster.
Time have changed now in 2020, and some of that info is out of date.
But the free tax sites are great, and they should be able to talk you right through it, now.
TurboTax is your frand.
You can write off so much it's so awesome. As soon as I talk business with anything TAX WRITEOFF.
I almost wrote off my TV one year because I messed with SmartTV programming but I thought that might be a stretch. lol
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