As a freelance writer for many years I’ve been dealing with the ins-and-outs of filing taxes through the Schedule C self-employment form. With the state of the economy many more taxpayers are newly minted self-employers and get to wrestle with all the tax implications that status brings. Here’s a nice, quick overview of self-employment and federal income tax with some strategic advice thrown in for good measure.
My best advice? Obtain the services of a certified CPA, preferably an individual you can sit down with sometime in the next six weeks or so — do not wait until the last minute — to discuss your particular situation and how to take advantage of every tax opportunity available to you. After trying both ways (on my own or with tax software, and using a professional) the amount spent on CPA services is almost always easily covered by the saving the professional finds with your return.
I’m getting this post up this early in the year because if your employment status changed last year there is no time to procrastinate or delay getting everything in order well in advance of the ides of April.
From the link:
It used to be that the vast majority of people worked in staff jobs.
But in a tough economy, the number of independent contractors, temps, part-timers, and freelancers expands.
If you become a contingent worker, you’ll need to rethink your taxes. For someone used to being on staff, “It’s a mindset shift,” says Eddie Gershman, a partner in Deloitte Tax’s private client group. The common perception is that you’ll pay more tax if you work for yourself, since you’ll cover the employer portion of Social Security and Medicare taxes. While you will be on the hook for that self-employment tax, the tax advantages to working for yourself can soften the blow. Here’s how to get the most out of deductions: