ALL THE MONIES
accounting for your income
Did you know?
If you are a freelancer, the minimum amount of money you need to earn and to file a tax return is $400!
"Why is the number $400? While you may not owe any income taxes, as a freelancer, you must pay self-employment taxes in addition to regular income taxes. Self-employment taxes start if you earn $400 or more. Therefore you must file a tax return if you GROSS $400 OR MORE.”
“If you have business expenses that should be taken into account, do not expect the IRS to know that. You must file a Schedule C or Schedule C-EZ that indicate your expenses. That way it may be that you don’t owe any self-employment taxes.”
STEP 1. Pick your tax professional : TurboTax, H&R Block, or your mom’s accountant friend
STEP 2. You will need to input or turn over lots of details so get ready for LISTS. Let's just start with INCOME :
-> List all the companies and people you worked for this year.
- Were you paid in cash or check?
- Did those funds go into your personal account or business account?
- Did you receive funds through Venmo or Paypal?
- Were you paid over $600 in total, as in Jan-Dec 2016? Did you complete a W-2 or W-9? This DOES change the way you file the income so make sure you find out.
-> If you are receiving W-2 forms most of the time taxes will have already been taken out where as with W-9 forms you will be held accountable to pay taxes on those funds. So do yourself a favor and make sure amount totals are correct!
-> Follow up with those companies with a professional reminder “Hi __________, so glad we got to work together last year. I am starting to get organized for this tax season and want to make sure you have my proper mailing address for my 2016 1099-MISC.”
*Also keep in mind if you paid any one this year more than $600 (i.e. paid a poet to lay vocals over your track), you need to send them a simple 1099-MISC. Click this link for a quick solution
**All 1099-MISC have to be mailed, filed, or e-filed by January 31, 2017.
-> MAJOR TRICK print or download out all your bank statements for 2016. If you are visual, try highlighting all the income with one color and expenses with another color. If you love excel sheets download and sort that baby!
Feeling overwhelmed? Turbo Tax has some great videos :
DISCLAIMER : All tips and tricks are not given from an expert accountant or CPA. These notes are from personal experience and do not replace professional tax planners or financial planners.
The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. Presentation of the information via the internet is not intended to create, and receipt does not constitute, a tax planner-client or financial-planner-client relationship. Internet subscribers, users and online readers are advised not to act upon this information without seeking the service of a professional tax and/or financial planner.