Tax season is upon us here at Almost Millions. This year, individuals have three extra days to file taxes–because April 15 falls on a Saturday and Monday, April 17 is a holiday in the District of Columbia, Tax Day 2017 is Tuesday, April 18.
With tax season here, we did the simple thing: Talk to a bunch of smart people about taxes, freelancing, and 1099ing. That means it’s Tax Week at Almost Millions, and here’s a little bit of freelancer assistance.
Whether you’re filing taxes for April 18 or are just planning your freelance business’ long slog of taxes over the next year, some accountant advice is always a much needed thing. For a quick understanding of freelance tax breaks and opportunities when you’re self-employed, Almost Millions spoke with Brian Ashcraft, director of compliance at Liberty Tax Service.
Liberty Tax Service is the third largest tax preparation service in the United States, and specializes in serving both individuals and small businesses.
Here are a few of Brian’s most useful tips:
Self-Employed Tax Tips: Independent Contractors
Track Your Expenses: Ashcraft says many freelancers and “gig economy” workers don’t do a good job of expense tracking. “Many people don’t take deductions they’re entitled to,” Ashland explains. He also notes that marketing yourself is an expense, which means things like business cards and online advertising are tax deductible.
Separate Your Bank Accounts: During our conversation, Ashcraft emphasized that freelancers and 1099ers should have separate accounts for business and personal expenses. “It’s a simple thing for a freelancer to get a separate account, and if you get that income and put it into an account, it helps you not to co-mingle funds. This helps when it’s tax time.”
Self-Employed Tax Tips: Single-Employee Corporations
Remember Your Tax Deadline: Unlike individuals, corporations have to file their 1120 form in March–not on April 15 or April 18.
“Some people find that out the hard way,” Ashcraft says. “They file at the April 15 deadline and realize they don’t have that.”
Use Pass Through Deductions: Things like software packages or home office furniture, which cost money, can be used for a Section 179 deduction–which means you can deduct the full purchase price of qualifying equipment or software purchased or financed during the tax year If you’re buying something like a new desk or new editing equipment, this can considerably reduce your business’ tax burden.
Self Employed Tax Tips: Leaders Of Small Businesses
Use The PATH Act: Under a 2015 law called the PATH Act, small businesses can receive tax incentives of up to $5,600 for hiring either military veterans or longterm unemployment recipients. Ashcraft says that this incentive can be very helpful for small businesses, and can help offset the cost of hiring an employee.
Self-Employed Tax Tips: Other Resources
Amazon: U.S. Master Tax Guide (2017) by CCH Tax Law Editors
Amazon: J.K. Lasser’s 1001 Deductions and Tax Breaks 2017: Your Complete Guide to Everything Deductible by Barbara Weltman
Amazon: 475 Tax Deductions for Businesses and Self-Employed Individuals: An A-to-Z Guide to Hundreds of Tax Write-Offs by Bernard B. Kamoroff C.P.A.