17 Dec Understanding Tax For Self Employed Workers
If you are a writer or an editor and are going to be paid as an independent contractor, you will of course need to have your taxes ready to go when tax filing time rolls around. By understanding tax for self employed workers, you can work out how much to withhold from your paychecks so that nothing is left to chance. This way, you can avoid going into debt.
In some cases, you will need to make quarterly payments to the IRS. By looking at how much you earn every three months, you can make those quarterly payments to the government agency in question. It might be helpful to overpay by just a percentage point or two, as this will allow you to get money back at the end of the year.
Speaking with a trusted financial advisor can help you navigate some of the details. Usually, your advisor will set up a consultation at which the two of you will go over your earned income. The advisor will point out exactly what you need to do over the following months so that you have all your paperwork ready to go.
Pay attention to the tax forms that you are likely to need. Self-employed workers often have to file a few extra forms, and you will need to make sure that you have the forms before the deadline. Most federal and state forms can be picked up at the local municipal building or even at the town library, where they are likely to be available where everyone can see them.
Keep records of the forms that you send each year so that you can review them if something happens. Making a photocopy of each of your most important forms is usually the best bet. The copies can be stored in a file and brought out when necessary. Only throw out old tax forms after several years have past.
Expect to make money irregularly if you are on your own. Instead of going to a place of employment eight hours each day, you will be able to work whenever you want. You will make much more money during certain weeks than others. The goal is to pace yourself so that you have a decent income while continuing to pay your bills as they arrive in the mail.
If you are buying your own health insurance, you should figure out your health savings accounts are going to be taxed. This might become complicated, but your advisor can always help you figure out the details. If you are also investing the stock market, large gains will have to be reported and factored into your income each and every calendar year.
You will ultimately want to do your research if you are planning on working for yourself. Once you have the ins and outs of the job, you can better determine how to proceed. As long as you keep clean and legible records, you’ll have all the information you need to file on time each year without breaking the bank.