Look, we get it: You didn’t become a freelancer to decipher complex tax codes. Unfortunately, it can be confusing to understand how much you owe and when. That’s especially the case when your work is coming from many different places and at an unpredictable cadence.
That’s why we’re here to eliminate any confusion come tax time! Here are four top tax tips that will help any freelancer keep the most money in their pocket.
Centralize, centralize, centralize
We know what it’s like to be a part-time or full-time freelancer: At the end of every year, you likely have a stack of 1099s, a pile of invoices, and a bunch of concerns regarding whether you’re filing your taxes correctly. Centralizing all your annual invoices, taxes, and expenses in a single place can give you the peace of mind you need to stay on top of things. Think of it as simplifying your finances despite all the chaos.
Itemize, itemize, itemize
Let’s face it: Collecting receipts is a pain, and it’s also a leading cause of desktop clutter. However, it’s important to understand exactly which expenses you can deduct from your taxes owed so that you can itemize them accordingly. Along with the tools and technology you need to do your job, you can also deduct mileage and expenses associated with business meetings and travel. As you’ll find out in a bit, there’s an easy way to track and calculate those deductions.
Quarterly payments will lessen your tax burden
Nobody wants to pay taxes four times a year! However, making smaller quarterly estimated tax payments can save you a significant amount of money (want to know more about quarterlies, read this post). When freelancers don’t pay estimated quarterly taxes, the money drain can really add up: The penalty is up to 6% for every month, and there are additional penalties for late-payments and underpayments. However, there are a couple of major challenges when it comes to quarterlies: One is calculating an estimate of your annual earnings in real-time, and the second is ensuring you have enough money on hand to cover your quarterlies. Luckily, we’ve figured out a way to handle both with ease.
Make it easy to pay what you owe
Financial discipline is wonderful in theory, but the real world often doesn’t cooperate. You may intend to put some money away with every paycheck… but then your laptop breaks down, your car needs repairs, or your favorite band reunites to do a one-night-only show in your hometown. The point is, both good and bad surprises happen, and those surprises require money – money you should probably be saving for tax time.
Whether it’s accurately estimating your annual pay, understanding if you should pay quarterly taxes, knowing what you can deduct, or making sure you have enough money to cover payments, it’s important to understand all the variables at play as a freelancer. Good news: There’s a single app to take the guesswork out of your taxes.
RoamHR understands the tax challenges freelancers face, which is why our platform solves each of these pain points. Our app makes it incredibly easy for 1099 employees to save money, plan for quarterly tax payments, track mileage, and other deductible expenses, and automate your quarterly tax payments. The result is more clarity on your financial situation, more money in your pocket, and more freedom to do what you do best.
Are you ready to start solving your tax headaches the easy way? Get your free, 30-day trial of RoamHR here.