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Tax Deductions Are Few for Pro-Bono Freelance Work, Get in the Know

Like many freelancers who are good at what they do, you likely get approached by not-for-profit organizations (or friends who work for them) to provide pro bono services. That is, you do work and provide services without charge. This is a great way to gain exposure in a market as well as create some goodwill, however, it is important to understand that it really has very little benefit to your tax situation. Unlike actual charitable contributions and some expenses related to performing pro bono work, such as mileage driven and supplies used in the performance of the volunteer tasks, any

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Suddenly Self-Employed? Key Tips for Combining W-2 & 1099 Income

Given the focus in May on National Small Business Week, (May 1 to 7) and the end of the tax filing season, if you find yourself transitioning from regular wage-earning employment income (reported on a W-2) to self-employment (tracked by those who pay you on a 1099), or a combination of both income streams, you need to understand how to handle your income tax and other taxes to avoid problems later. If you are not a full-time freelancer, and you have a side job such as consulting, writing, or selling ecommerce or other products, you will have to handle your

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Tax Day isComing! Can’t Make the April 18 Deadline? File an Extension for Freelance Taxes Now to Avoid Fines and Penalties

Missing documents? Mega-busy calendar? If you’re like many freelancers you have more than enough on your plate to keep you busy all day every day, without the added burden of tax preparation. However, the IRS doesn’t take kindly to missed tax filing deadlines, which is why you need to file your taxes by the April 18 deadline, or file an extension now to avoid paying fines and penalties later.    Here’s what to do if you can’t file your freelance return on time:   Make sure you file Form 4868 by April 18, 2022 to get an extension of the

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Crowdfunding for Your Freelance Business? Be Prepared to Report and Pay Tax on the Contributions.

What better way to fund your next big freelance endeavor than through crowdfunding? All it takes is a little effort on your part and you can rake in some cash “gifts” and “goodwill contributions” to help you move your vision forward, right? While this is true from a purely business development perspective, what isn’t true is that the money you bring in is tax-free.  In fact, the IRS views any crowdsourced funds the same as any other business or personal income. As a result, you will be taxed on it. In fact, if you are using a crowdfunding platform such

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Cashing In on Crypto? Getting to Know HIFO! It Can Save You Significant Tax Dollars

If you are holding bitcoin in your virtual currency portfolio, you need to be aware of the HIFO (highest in, first out) tax loophole which could save you significant amounts of cash by reducing your tax burden on cryptocurrency capital gains. Here Is How HIFO Works for Bitcoin and Other Virtual Currency Investments: As you may be aware, when you sell cryptocurrency, you can select the specific unit you are selling. In this scenario, the strategy is to use the value of the most expensive bitcoin you must determine your tax obligation for any capital gains you have. This higher

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Freelance Businesses Claiming the Employer Retention Credit Now Face an Increase in Taxable Income

The Employer Retention Credit (ERC) was first introduced in 2020 as part of the U.S. government’s relief for small businesses who were adversely affected by the pandemic and was also made available in 2021 to employers who kept employees on their payroll during Covid-19. The bad news: if you applied for the ERC in 2020 or 2021 even if you have not received the money yet, you will now face a tax bill payable for funds you either received or may receive. Even if the ERC payments that you applied for is still pending based on your payroll, they are

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Is the IRS Backlog Affecting Your Freelance Business? This Advice Can Save You Headaches and Hassles

Although it is almost the midpoint of the tax filing season for 2021 returns, the IRS is lagging seriously behind on processing 2020 returns, to the point that the delay in processing returns from prior years and issuing refunds is so dire that many freelancers and business owners have been waiting to resolve their IRS issues for months, if not a full year. If you are in this situation, know that you are not alone—it is estimated that the IRS has over six million returns still left to begin processing and 35 million more pieces of unopened correspondence to address

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The 2022 Freelancer’s Guide to Gig Economy Taxes

The gig economy is gearing up and if you have been a freelancer for any length of time, you are helping to drive it forward. Congratulations on your success! However, it is critical not to lose sight of the tax obligations that come with operating as an independent contractor or freelancer in the gig economy, otherwise what is now a lucrative and enjoyable business can turn into a headache and significant stressor. To avoid this pain, you need to have your tax obligations in order. Whether your gig economy income is your side hustle or full-time income, the ideal time

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Tax Law

Notable Tax Updates for Freelancers in 2022

We are living in a world where things seem to be changing every day and it can be easy to be confused as to what you should or shouldn’t do. Don’t make tax season a headache and know if your deadlines, or income threshold for marginal tax rates has changed. Tax Due Dates for 2022 January 18, 2022 – Deadline for Q4 2021 estimated tax payments. January 31, 2022 – Deadline for clients to send freelancers their W-2 or 1099-NEC/1099-MISC forms. March 15, 2022 – Deadline for partnership tax returns (and LLCs that are taxed as a partnership) as well as S-corporation tax returns.

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The 2022 Freelancer’s Guide to Gig Economy Taxes

The gig economy is gearing up and if you have been a freelancer for any length of time, you are helping to drive it forward. Congratulations on your success! However, it is critical not to lose sight of the tax obligations that come with operating as an independent contractor or freelancer in the gig economy, otherwise what is now a lucrative and enjoyable business can turn into a headache and significant stressor. To avoid this pain, you need to have your tax obligations in order. Whether your gig economy income is your side hustle or full-time income, the ideal time

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