5 End-of-Year Tax Tips for Freelancers

By
Patrick Dodd.
Filed in Web 2.0

We’re not certain how it happened, though it’s already a finish of a year. If you’re like many freelancers, you’ve substantially avoided meditative about your taxes until now. Actually, you’d substantially still like to equivocate meditative about them. But usually a tiny bit of bid now will make a universe of disproportion come Tax Day.

Here’s a brief and discerning sign of some of a things we should cruise about before a finish of a year to ready for taxation season. And trust us when we say, some of them can’t wait until subsequent year.

Recommended Reading: 5 Ways Freelance Designers Can Make Passive Income

1. Get Organized Now

The many critical thing we can do when it comes to your taxes is stay forward of a game. Ideally, you’ve been regulating some arrange of complement for gripping track of invoices and expenses. If not, it’s time to start compiling all of those lax documents.

That bucket of profits you’ve been gripping underneath your desk? Start digging by that thing to find any equipment we can write off.

Here’s a list of some common write-offs for freelancers:

• Equipment


• Software


• Office supplies


• Books, magazines, anxiety materials


• Telephone and Internet expenses


• Travel


• Cab, subway, and train fares


• Business dishes and entertainment


• Office rent


• Gas and electric


• Legal and veteran fees


• Promotion


• Memberships (professional organizations)


• Messengers, private mail carriers, postage


• Business insurance


• Tax preparation


• Business loan interest


• Taxes and permits


• Home bureau (see Tip #5)

2. Stay Organized

As a freelancer, it’s critical to not usually get your annals organized, though to keep them orderly into a future. According to CPA Jonathan Medows, freelancers are always during a high risk of audit. He suggests gripping minute annals of your income and losses for during slightest 6 years (three years longer than what a IRS recommends).

“If we are audited, a supervision will insist on saying receipts,” he says. “People cruise that carrying a credit label matter is enough, though it’s not. If we buy something from Amazon, a supervision wants to know that they are swell protectors for your bureau – not toys for your kids.”

3. Defer Income if You Need To

If you’re already disturbed about being means to compensate taxes on this year’s income (you’ve been environment aside 25 percent, right?), we competence cruise waiting to send invoices on a work you’re doing right now.

Hold off until mid-December and we many expected won’t get paid until January, definition that’s income we won’t have to compensate taxes on until 2016, giving we a tiny some-more time to locate adult on how most income we should have been putting away for taxes.

This plan also works good if we find yourself right on a corner of jumping into a aloft taxation bracket. Of course, either or not we adopt this plan will count on what fashion you’ve set in a past – either we explain income when remuneration is perceived or when services are rendered. Switching now competence lift a few flags – actually, it really will.

Read Also: 10 Tips To Invoice Your Freelance Clients Professionally

4. Grab More Deductions

Another good approach to squeeze some-more deductions is to offload as most money as we can before a finish of a year. That scanner/copier you’ve been meditative about getting? That new Mac Pro? That RED Epic Dragon? Pull a trigger and get those losses on your 2014 books.

There’s no reason to wait until Jan when a write-off won’t do we any good for another year.

5. The Home Office Deduction

If we use a dedicated area of your home for your business, we can deduct a apportionment of your vital losses as a “home office” deduction. The calculation is flattering simple.

Just figure out what commission your bureau space is of a sum block footage of your home, and afterwards greaten that commission by a cost of vital in your home (mortgage interest, skill taxes, utilities, maintenance, etc.). That high lease you’re profitable is finally going to compensate off.

Read Also: 8 Tips To Create An Organized Productive Home Office

Use these tips to get yourself in tip-top figure before a finish of a year. Just a tiny bit of formulation and classification is all it takes to keep your taxes from strenuous we after on. Trust us, you’ll be thanking yourself later.

Editor’s note: This is a guest post contributed by Patrick Dodd, President of Blinksale, an invoicing app designed for a tiny business freelancer in mind. He’s also an zealous song guru, sports fan and surfer.

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5 End-of-Year Tax Tips for Freelancers