If you work as a freelancer in Georgia, you are in charge of handling your taxes. You do not have an employer to do so for you. Understanding the ins and outs of freelancer tax laws, therefore, is critical if you wish to avoid penalties from the IRS.
Doing your taxes as a freelancer does not have to be overwhelming.
Choose your business structure
As a freelancer, you technically own your own business. Even if you are the only “employee” in your business, you are still an employer. If you offer a service, you are a sole proprietor in the eyes of the law. As a sole proprietor, tack a Schedule C (Form 1040) onto your personal taxes before the deadline. Schedule C is a profit and loss form.
If you have a partnership with someone else, you will use Form 1065 instead. This form separates profit and losses for each partner based on how much of the business each person owns. Each owner will have to enter individual profit and loss data on personal returns. Although more complex business structures exist for freelancers, sole proprietorships and partnerships are the most common.
Look for tax breaks
Owning your own business comes with certain advantages during tax time, including claiming deductions and breaks for business expenses. Throughout the year, keep track of your business-related expenses. These may include office space, software, hardware, work-related equipment, printers and travel expenses. You may then be able to list these expenses on your taxes to qualify for deductions on what you owe the IRS.
Pay quarterly tax estimates
Most tax professionals recommend setting up a quarterly tax payment plan as a freelancer if you believe you will owe more than $1,000 in taxes at the end of the year. Each quarter, pay an estimate toward what you will owe in taxes. This will help you stay on top of tax payments and avoid having to pay penalties or interest later. Many people seek professional help for complex freelancer tax returns.