The flexible working hours and being in charge all some of the things that are motivating many Americans to become freelancers. Therefore, if you are considering making this move into the freelance industry, you need to get insights on the taxation. You need to know that taxation works differently between the freelancers and the 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. The money you get when you are employed is less different from voluntary and mandatory deductions. The employer will withhold your income tax for the month and make other voluntary deductions. Your income bracket and where you live will impact on the taxation rate. Also, other factors such as the number of dependents will influence the taxes you pay. It is, therefore, wise you find a genuine website that will assist you to know the various tax forms to use when you are an employee. You should also get more information on your State taxation.
When you are a freelancer, you need to understand that you are responsible for handling all matters relating to taxation. Know that payments from the clients have zero mandatory and voluntary deductions. To ease calculating the taxes to pay as a freelancer, you need to keep track of all your earning for a given period. It may be challenging for new freelancers to handle the complex taxation process. It is wise you look for resources that will guide you on how to handle this task. You may need to hire an accountant to help you calculate the taxes when you are a freelancer. The other option is to find software that you can use to calculate the taxes when you are a freelancer. You should therefore compare these two options to determine the one to use. You can deduct certain expenses from your income as a freelancer reducing the amount you pay in taxes.
Handling the taxes as a freelancer does not have to be hard when you keep a good record of your earnings. Consider using spreadsheets to input your income after every work, record the money you earn and the expenses you incur.