Common Expenses that You Can Deduct from Taxes When Working as a Freelancer
When working as a freelancer, you are required by the IRS to do your own taxes. Hence, you need to keep a record of your earnings for a given period as you will use it in calculating the taxes. It may headache for many freelancers to learn the right way to do the taxes. 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. Here are common expenses to write-off in your taxes when working as a freelancer.
You can deduct the money you spend on office supplies to calculate your net income. The IRS, therefore, allows you to deduct this expense from your income, lowering your tax burden. It is, therefore, necessary you keep all receipts after you purchase various office supplies. With the receipts, it is easy to calculate how much money you have spent on office supplies. Also, you can present the receipts to the IRS in case of a dispute about your tax returns.
You can also deduct the meal expenses when working as a freelancer to reduce the taxes you pay. However, it is not all meal expenses but only the ones you consume when on a business trip. Understand that you can only put reasonable meal expenses. Therefore, you will have problems with the IRS when you deduct inflated 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. You may be paying insurance for the car you use as a freelancer. Hence, you need to keep a record of all the premiums you pay to deduct them from your income.
When you have understood about the common expenses to write-off in your taxes, it is important you now try out the form 1099. It is essential that you know the different types of the 1099 forms. You are required to know the ways in which you are supposed to fill out each form. You are also required to know the person who you are to give the 1099 form. 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.