Common Expenses that You Can Deduct from Taxes When Working as a Freelancer
The IRS considers freelancers to be self-employed and requires them to do their own taxes. As a freelancer, you must keep accurate records of the payments you get from clients as you will use the record to determine taxes to pay. You may challenge knowing all the forms to use for filing your taxes as a freelancer. To overcome this obstacle, it is smart you seek the help of the best tax consultant near you. The goal is to rely on the expertise of this accountant to know the tax forms to use when you are self-employed. The goal is to ensure you pay the right tax amount and deduct various common expenses. Read more now to see the expenses that are tax-deductible when you are a freelancer.
To run a freelancer agency, you may have to spend money on office supplies, thereby lowering the profits you generate. Thus, you can subtract the office supplies from your income when calculating your taxes as a freelancer. Hence, make it a habit to file all the receipts you sell from the office supplies vendors. You will therefore have a source of data for determining the cost of office supplies for a given year. You can also use the receipts as evidence if the IRS requests for them.
The meal expenses is the other tax write off you will enjoy when you are a freelancer. When you take a business trip, you will take meals, and you are allowed to deduct these expenses on the taxes you pay. Understand that you can only put reasonable meal expenses. The IRS will not accept extravagant meal expenses. Ensure you keep the receipt for the meals you deduct the expenses from the taxes you pay.
Freelancers are also allowed by the IRS to deduct the business insurance expenses from their incomes when calculating the taxes. Maybe you have insured your business car or building. Thus, the IRS allows you to include the premiums as part of your tax deductibles.
form 1099 is another thing you should keep in mind once you know about the common expenses to write-off in your taxes. You are supposed to know that there are different types of forms. Every one of them has a way that you are required to fill it. The 1099 form is given to customers who owe you a certain amount of money. The form 1099 is the one that you are required to file your taxes. Hiring a CPA will be the best idea since he will show you how you are supposed to fill out the form 1099.