Whether you have just started a side hustle or have been freelancing for years, filing taxes can present challenges. Here are some points to keep in mind.<\/p>\n\n\n\n
As a freelancer, you can set up your business as a sole proprietor or a Limited Liability Company (LLC). An LLC can be taxed as a sole proprietorship or as a corporation.<\/p>\n\n\n\n
If you’re new to freelancing, you might be surprised to learn that you’re on the hook for both the employee and employer share of FICA taxes. FICA tax equals 15.3% of income \u2014 12.4% for Social Security and 2.9% for Medicare. If your income is greater than $200,000 ($250,000 married filing jointly\/$125,000 filing separately), an additional Medicare tax of 0.9% applies.<\/p>\n\n\n\n
Freelancers, small business owners, and independent contractors generally must make quarterly estimated tax payments to the IRS to avoid being subject to an underpayment penalty.<\/p>\n\n\n\n
Once the total exceeds $600, you will receive a 1099-K for any transaction settled through third-party payment networks (credit cards, debit cards, etc.). The amount doesn’t have to come from a single transaction.<\/p>\n\n\n\n
Self-employed individuals can reduce the amount of taxes they owe by contributing to a qualified retirement plan. A SEP (Simplified Employee Pension Plan) has a high contribution limit \u2014 25% of net earnings, up to $69,000 for 2024.<\/p>\n\n\n\n
A SIMPLE (Savings Incentive Match Plan for Employees) IRA allows you to put all your net earnings from self-employment into the plan, up to a total of $16,000 or $19,500 if 50 or over.<\/p>\n\n\n\n
You may deduct what you spend on: continuing education, vehicle expenses, home office expenses, internet and phone service, travel to business meetings and conferences, and interest on business loans.<\/p>\n","protected":false},"excerpt":{"rendered":"
Whether you have just started a side hustle or have been freelancing for years, filing taxes can present challenges. Here are some points to keep in mind. YOUR BUSINESS STRUCTURE As a freelancer, you can set up your business as a sole proprietor or a Limited Liability Company (LLC). An LLC can be taxed as … <\/p>\n