Preparing for Tax Season as a Freelancer
Preparing for tax season as a freelancer can be overwhelming, but with proper planning and organization, it can be a manageable task.
MichellaTextbroker Author Services Rep
Now that you are a freelancer, you probably have questions about how to prepare and file your tax return. When you work as an employee for an employer, the company withholds all federal, state, local, Social Security, and Medicare taxes from your paychecks. As an independent contractor, you are no longer an employee. So, you are now responsible for paying your taxes. Knowledge and preparation go a long way as you prepare for tax season as a freelancer.
Looking at the Difference Between a W-2 Form and a 1099 Form
When employed at a company, you receive Form W-2 each year. This is an official Internal Revenue Service (IRS) form issued to you for income tax filing purposes. A W-2 form includes information about the taxes that were withheld from your paychecks throughout the year. It also includes the total amount of gross earnings you made during the year. But, you do not receive a W-2 form when you are a self-employed freelancer or independent contractor. Instead, you receive a Form 1099-MISC, provided that you earned at least $600 for the entire year.
You will receive a physical copy of your 1099 form via the United States Postal Service by January 31. Unlike a W-2 form, you are not required to submit your 1099 form to the IRS. However, the nonemployee compensation found in Box 7 of your 1099 form is still reported to the IRS. Note that you are responsible for paying taxes on all earnings even if you did not earn enough money to receive Form 1099-MISC. All earnings as a freelancer are reported on Schedule C (Profit or Loss from Business) and Schedule SE (Self-Employment Tax).
Use Tax Preparation Software as an Easier Way to Prepare Your Tax Return
Although filing taxes as a self-employed freelancer may seem scary, you do not have anything to fear. Simply report your nonemployee compensation with complete honesty. If the tax forms are too tedious to fill out, find inexpensive tax preparation software or an online software preparation program. You can also file your tax return via E-File. Additionally, you can hire a professional tax service to calculate your taxes. However, you will likely save money if you prepare your taxes yourself with the help of software. Plus, you can find tax preparation software designed to calculate all taxes with complete accuracy as long as you provide accurate information.
Important Things to Know About Filing Taxes as a Freelancer for Textbroker
Do Not Wait Until the Last Minute to Prepare Your Taxes
Prepare for the tax season as a freelancer by staying organized. If you are a freelance author for Textbroker, compensation is listed in the Pay-Out section of your account. Thanks to this, it is easy to keep track of your income throughout the year. Prepare for filing taxes as a freelancer by paying estimated taxes during each quarter. The easiest way to pay estimated taxes is using the online IRS Direct Pay option. You can find the Direct Pay option by visiting the official IRS website.
You must know your total tax from the previous year’s tax form. Next, provide your routing and checking account numbers plus the amount you wish to pay. The IRS will withdraw the payment from your checking account. Check the option to receive an email notification. When it is time to file your taxes, remember to include the amount of money you already paid to the IRS via estimated payments. You can review your previous payments on the IRS Direct Pay website. Plus, you can view your checking account statements to verify the amount of paid estimated taxes. If it turns out that you paid too much money, you will receive a tax refund.
You do not necessarily need to pay estimated taxes if you are also employed as an employee. In this case, simply tell your employer that you want to fill out a new Form W-4 for income tax withholding purposes. Fill in the appropriate section on the W-4 to have your employer withhold additional taxes from each paycheck.
Filling Out and Submitting Your W-9 Tax Form to Textbroker
If you are a new freelance author at Textbroker, make sure you check out the personal information found on the User Data page in your account. Whether you are a new author or a seasoned writer at Textbroker, you are required to submit a new W-9 tax form (Request for Taxpayer Identification Number and Certification form) if you make any changes in the User Data section.
Form W-9 lets Textbroker know if you are subject to backup withholding of federal taxes from your payments. Textbroker does not permit you to file an online version of the W-9 tax form. For Textbroker, you must submit a signed and dated physical Form W-9.
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