In recent years, freelancing and gig work have grown in popularity, especially in Texas – providing individuals with the freedom and independence they want. However, being your employer entails handling your taxes. But you do not have to do this alone – a professional can help you with Dallas tax preparation so that you can focus more on what you do best!
Taxes as a gig worker – the basics.
Let us clear up a frequent misconception: just because you do not work 9 to 5 does not mean you are immune from taxes. You still have to pay taxes on gig money.
As a gig economy worker, you fall under the category of freelancer or independent contractor. This might be your full-time career, or it could be a side gig to supplement your main source of income. Whether you generate gig money full-time or part-time, you must identify as self-employed and understand how to file taxes as a self-employed worker.
Paying these taxes as a self-employed individual requires anticipated tax payments, which is more complicated than the simple withholding done for regular workers who receive a W-2. To avoid tax penalties, make projected payments when you generate money.
How should you file taxes for your new side job?
Even if you work full-time, you must declare your income as self-employed. When you file your individual 1040 tax return, you will use a Schedule C form.
The most important criterion in determining whether you need to submit a tax return for your gig income is your total net earnings for the tax year. Generally, you must submit a return if your net self-employment earnings exceed $400. You will most likely be liable for paying income and self-employment taxes (Social Security and Medicare).
When it comes to preparing your income tax return, having accurate records will save you time and aggravation. Apps used for side employment frequently ease revenue monitoring, and do not forget that routine and required small company costs are deductible. Collecting tax records such as Form 1099-K or Form 1099-NEC is critical since these documents will allow you to properly report your gig revenue to the IRS. Always compare these forms to your records to guarantee correctness.
Do not overlook small tax-deductible expenses.
Never underestimate how fast small company costs may lead to significant tax savings. It is easy to dismiss minor expenses as unnecessary. However, if you have a few small expenses each week or month, you may discover that there is a larger amount to deduct when it comes time to file taxes. Every little bit helps to reduce your tax obligation even more.
Get help from a professional today.
If you have fallen into any tax traps, a tax professional can help you figure out what is going on and possibly resolve the matter with the IRS. So, schedule an appointment today!
