I just started to work for a design firm, but only part-time (temporary). I am a little confused. Is that the same as freelance, as far as taxes go? I don’t think of myself as a freelancer.
Anyway, they write me a check, and that’s it. I am not employed or anything.
So how does that go with taxes… How do you guys do it?
Sorry I’m ignorant, but I never had to deal with taxes before; I wasnt living here in the US. And I read somewhere that freelance taxes are different - 4 times a year or something??!!! So I want to make sure.
Maybe you should sock away even more. Remember: There’s a self-emplyment tax you also need to pay (what you’re employer would normally pay). Keep track of any costs you incur that you could write off against that money.
Be really carefule - I got nailed the first year I had a substabtial amount of freelance work. The IRS kicked my ass.
I did freelance for about five years while I was still fully employed. I was hired as an independant contractor. The client 1099’ed me (the IRS form for reporting wages of non-employees) I itemized my deductions, filing a Schedule C-Self employment schedule, for the freelance work.
You’ll need to pay estimated quartley taxes April 15, June 30, Sept 30, and Jan 15. Both federal (Form 1040-ES) and State (Form 540-ES) (if applicable). Quartlery taxes to be paid on income earned in that period only, so if the freelance job only runs a few months, your calculations will be different each quarter.
As a freelancer, you can set up a SEP IRA to put money away for your retirement, pre-tax.
You can deduct your hardware and software, but be careful as the IRS will make you prove the portion of your computer usage for business. I was audited for this one, and was able to prove that 100% was for business only because I had four computers at home and was able to show that the “personal use” one was not deducted.
This write-off on hardware/software is one of their “red flags” that trigger audits, so don’t cheat. Also, cell phone business usage, and car-for-business travel are red flags.
Thanks for replying. That kind of sucks. I am only expecting to work at this firm for a month or two, and the wage is minimum. After that I don’t know. Does it mean I only file for taxes for the quarter when I actually earned something, or do I need to keep filing after when I am unemployed and don’t make any money?
What if the firm doesn’t give me any forms for taxation purposes…?
Also I don’t have any expenses with this because I work at their office, except for gas mileage.
I was not working before because we travel a lot because of my husbands in the military. Me and my husband always filed jointly at the end of the year. Can we still do that?
If you are just doing one or two freelance jobs intermittently, I would not file quarterly estimates. I would wait until the end of the year and when your client sends you a 1099, I would just roll that 1099 into my joint filing along with my W2. Do you itemize? If so, that would be the only time you would have any write-offs. Even so, since you say you’re at their office, the write-offs may be less than the standard deduction for a married couple filing jointly. Unless you are doing this type of work on an ongoing basis, there is probably no need to do estimated quarterlies.
Your client should have asked you for your Social Security information. You may want to ask them how they are going to handle your income frm a tax standpoint. That way, you’ll know what to do or what to ask a CPA.
