Today, Optima Tax Relief’s Chief Tax Officer and Lead Tax Attorney, Phil, shares five essential tax tips every self-employed individual should know.
Tip 1: Make Your Quarterly Estimated Payments
As a self-employed taxpayer, you are responsible for paying your taxes quarterly. Missing these payments can result in penalties and interest, so staying on schedule is key.
Tip 2: Don’t Forget Self-Employment Tax
Quarterly payments aren’t just for income tax; you also need to pay self-employment tax. This covers your contributions to Social Security and Medicare, which you handle on your own as a business owner.
Tip 3: Keep Accurate Records of Deductions and Expenses
Never guess when it comes to deductions. Keep detailed records of your business expenses and remember they must be both ordinary and necessary according to the IRS to qualify.
Tip 4: Understand 1099 Responsibilities
As a self-employed individual, you’ll receive a 1099 for the work you do. Additionally, if you hire independent contractors, you are required to issue 1099s to them as well.
Tip 5: Don’t Panic
Even if you’re facing an audit or IRS collection notices, stay calm. As a taxpayer, you have rights and options to resolve your tax issues.
Stay Organized and Informed
Being self-employed comes with tax responsibilities, but with proper planning and record-keeping, you can stay on top of your obligations and protect your financial peace of mind.
If you need tax help, contact us today for a Free Consultation