Many unwanted tax problems can surface for individuals working as freelancers and/or contractors. This list was created to bring awareness to the top misguided actions individuals often make in this type of situation.
1. Failure to plan for paying tax liabilities (federal, self-employment, and state taxes) that are due by the tax return filing deadline.
2. Lack of good financial records for the deductibility of expenses incurred while working as a contractor.
3. Not paying the correct amount of estimated taxes throughout the year on income earned.
4. Lack of participation in tax deferral investment vehicles that can help reduce tax debt while working as a freelancer.
5. Failure to work with a tax professional throughout the tax year to stay abreast of unique potential tax problems that could arise.
6. Not giving consideration to changing your business structure from that of a sole proprietorship to another more tax advantageous structure
7. Failure to negotiate a higher income in order to compensate for the additional tax challenges that come with being treated as a freelancer!
Tax planning performed throughout the year can help you gain valuable insight as to whether you're on the path to owing taxes, breaking even, or getting a refund. Click below to request a mid-year tax analysis...
Below are few relevant blog posts that provide more in-depth insight about some of the topics discussed above:
