Freelance News, Freelance Tips, Freelance Taxes, Freelance

3 Smart Ways to Lower Your Taxes if You’re a Freelancer

Freelance News Freelance Tips Freelance Tools Freelancer Taxes Freelancing Buzz Blog Posts

Gig workers represented 35% of the U.S. workforce in 2020, up from 14% to 20% in 2014, according to Forbes. “After being laid off or unable to work their normal jobs due to the pandemic, many people worked as independent contractors with food delivery services, companies that provide online tutoring or as virtual assistants,” says Wade Schlosser, founder and CEO of Solvable.com . These are just a few avenues that individuals took to earn money in 2020; others set up ecommerce stores, joined direct sales companies or tried their hand at making crafts for money. However, taking a freelance job or launching a business can present tax-time challenges for people who are accustomed to having taxes withheld from their paychecks. “Gig workers don’t have taxes taken out by their employer and, instead of a W-2 form, receive a 1099 form to show their pre-tax earnings. For those who aren’t familiar with paying taxes as an independent contractor, it can get complicated,” Schlosser says. Here are three ways you can reduce taxes as an independent contractor. Know What Business Expenses You Can Deduct “It’s important to remember that you can deduct all your business expenses as an independent contractor, including tools you need to do your job, such as a computer, software or apps, a smartphone and internet access,” says Schlosser. “You may be able to deduct mileage, maintenance and repair expenses for your car, as well as a portion of your lease or loan, if you use it in your freelance business.” If you started a business selling crafts or merchandise online, you can deduct expenses such as PayPal fees, website hosting and advertising, too. Gallery: More Than 50% of Americans Passed This Tax Quiz — Can You? (GOBankingRates) More Than 50% of Americans Passed This Tax Quiz — Can You? – mediaphotos / iStock.com Ad The Saving Lab Ad TettyBetty Slide 1 of 14: When it comes to finances, there’s a lot that Americans don’t understand — especially when it comes to taxes. After all, the tax code is long and convoluted, and many aspects of it change every year. Even if you consider yourself fairly well informed, there are likely important details about filing your taxes that you’re unfamiliar with. Find Out: Tax Year Deadline Dates You Need To Know Although accountants and software do a lot of the heavy lifting these days when it comes to personal taxes, you should still understand how taxes work so you can help avoid missteps that could cost you money. Here’s a quick, six-question quiz that focuses on some of the most important aspects of filing personal taxes. Last updated: Feb. 18, 2021 1/14 SLIDES © mediaphotos / iStock.com If you took any courses to help you perform your duties better, you can deduct the costs of books and classes. Don’t have receipts for your purchases? You can also use credit card statements and bank statements as proof of purchase. Contribute to Pre-Tax Investments You can reduce your adjusted gross […]

Leave a Reply

Your email address will not be published. Required fields are marked *