Key Things to Know About the Freelancer vs. Employee Taxation
The flexible working hours and being in charge all some of the things that are motivating many Americans to become freelancers. It is necessary you get more information on how taxes work for the freelancers when thinking about becoming one. Understand that the employees’ taxes are different from the self-employed people. To know taxation for the freelancers works it is smart you search for the best website to guide you. The target is to avoid problems with the IRS. Continue reading this blog now to see the key things to know about the freelancer vs. employee taxation.
The employer handles the taxes for all his employees. Therefore, the paycheck you receive as an employee has various deductions already made. The employer will withhold your income tax for the month and make other voluntary deductions. The amount you pay in taxes as an employee will depend on your income and where you work. It is also wise you learn more about things that can help you pay fewer taxes. To know more about the taxation forms to use when you are employed, you need to find the best site to use. It is also necessary you discover more about the local and State taxes.
When you are a freelancer, you need to understand that you are responsible for handling all matters relating to taxation. The money you receive from clients does not have any withholding taxes. You need to ensure you keep accurate records on the money you receive from clients for a given duration to use the amount to determine the taxes you will pay- You may have a difficult time calculating the taxes when you are new in the freelancing industry. It is wise you look for resources that will guide you on how to handle this task. Some freelancers opts to hire accountants to help them when calculating the taxes and ensure they pay them on time. You also need to weigh the alternative of getting a simple to use taxation software to use when you are new in the freelancing industry. You should therefore compare these two options to determine the one to use. The other thing is to learn more about the tax write-offs you are eligible to get as a freelancer.
Handling the taxes as a freelancer does not have to be hard when you keep a good record of your earnings. You may opt to use a spreadsheet to keep track of the money you have earned in the years.
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