Understanding Your 1099 Form as a Freelancer With the world moving towards a more and more hands off approach to work, meaning that more work is being outsourced and completed thanks to the global network known as the internet, there are likewise an increasing number of individuals who are working as freelancers. Freelancer jobs in America have grown exponentially in the past decade as more and more individuals are opting to perform their work or offer their services to different companies from the comfort of their own home or office. But the easy and potentially substantial income that is attached with freelance work still needs to be accounted for in the form of taxes; and, unlike those who are working for a structured company or organization, those who perform freelance work have the added responsibility of keeping track of their own taxes. In a company or organization, it is most often the case that the employer will withhold a certain percentage from each paycheck so that a person can fill out a W2 tax form during the tax season and pay their taxes from those withheld funds, but for freelancer this is not the case.
Independent Contractors Freelance workers, no matter what the duties are that they perform, are considered independent contractors under the tax codes of the United States, and therefore must fill out and comply to the tax regulations attached to the tax form labeled 1099. A 1099 tax form is the freelancerâ€™s version of a W2 and will help to classify their taxes accordingly. The first tip that freelancers who are trying to report and keep track of their taxes need to know is that there are different forms of 1099s that are used to report various types of income from freelance work and knowing which form to fill out and report with will be the first step in successfully completing your tax filings. For example, form 1099-INT is a 1099 that is used for reporting interest income received and form 1099-DIV is the form used for reporting gains from stocks and mutual funds; but these are only two types of 1099 forms and the form or forms you will need to accurately report on your taxes may be another type, so figuring out which forms you will need is the first step in filing taxes as a freelancer.
Benefits for Tax Season One of the main benefits of being an independent contractor, or freelance worker, is that you can deduct many things from your taxes as business related expenses. One of the major deductions that freelance workers can deduct from their taxes is their own health insurance costs as well as the health insurance costs of your spouse and your dependents. The world of taxes can be a disastrously complicated place, especially once legal actions are taken by the IRS. To help you with all of your freelance tax questions and issues, first contact a professional tax accountant to help file your taxes correctly and then contact a certified tax lawyer if legal issues arise in your tax reporting as a freelancer. Photo Credit: Mike Chaput, Robert Huffstutter
Published on Apr 14, 2014
With the world moving towards a more and more hands off approach to work, meaning that more work is being outsourced and completed thanks to...