How to handle taxes when you earn money in different ways?
December 14, 2009 2:09 PM Subscribe
Tax advice for a freelancer, contractor, and full-time employee
I'm trying to determine how to handle my January 15 quarterly taxes when I've been a freelancer, contractor, and full-time employee in 2009.
I was laid off from a full-time, salaried position at the end of January. In March, I started a job that was technically contract, but I was paid through a recruitment agency (taxes were taken out, and I'll receive a W2). When that contract ended in July, I began a part-time, salaried position, and also registered a DBA for freelance purposes.
Since I didn't have any freelance work in July or August, and honestly didn't have my shit together, I didn't file quarterly taxes on September 15. I did, however, have significant expenses over the summer related to starting a business and working from home (new computer equipment, software, office supplies, designer's fees for my logo).
Now I've had a fair amount of freelance work over this quarter for which I'll need to pay taxes.
My questions are:
1. Do I only need to factor in my freelance income for this quarter when I file? What about the already-taxed income I've earned during my contract earlier this year and the part-time position? Do I just claim that in April, when I've received my W2?
2. Can I deduct my summer business expenses on this quarter's filing? I've been told by other freelancers that you can space your business expense claims out during the year, and that you don't necessarily need to claim them for the quarter in which they happened. I don't know if this is true.
I know I should get an accountant, but with the holidays, I don't have the money to spend on one at all. Also, it'd be nice to learn how to deal with this myself.
I'm trying to determine how to handle my January 15 quarterly taxes when I've been a freelancer, contractor, and full-time employee in 2009.
I was laid off from a full-time, salaried position at the end of January. In March, I started a job that was technically contract, but I was paid through a recruitment agency (taxes were taken out, and I'll receive a W2). When that contract ended in July, I began a part-time, salaried position, and also registered a DBA for freelance purposes.
Since I didn't have any freelance work in July or August, and honestly didn't have my shit together, I didn't file quarterly taxes on September 15. I did, however, have significant expenses over the summer related to starting a business and working from home (new computer equipment, software, office supplies, designer's fees for my logo).
Now I've had a fair amount of freelance work over this quarter for which I'll need to pay taxes.
My questions are:
1. Do I only need to factor in my freelance income for this quarter when I file? What about the already-taxed income I've earned during my contract earlier this year and the part-time position? Do I just claim that in April, when I've received my W2?
2. Can I deduct my summer business expenses on this quarter's filing? I've been told by other freelancers that you can space your business expense claims out during the year, and that you don't necessarily need to claim them for the quarter in which they happened. I don't know if this is true.
I know I should get an accountant, but with the holidays, I don't have the money to spend on one at all. Also, it'd be nice to learn how to deal with this myself.
Basically you need to pay enough in taxes in January that you will not owe very much money in April. So, if your withholding was enough to cover the tax on your W2 work, then you just need to calculate your net business income. On the other hand, if you salary income was much higher than your freelance income, they may have withheld as if you earned that much all year and you won't need to pay as much or anything for Q4. Bottom line, do a quick estimate of how much taxes you will owe for 2009, subtract the amount witheld and then pay the difference in January. (You might want to pay a little extra in case of miscalculations and then file as soon as you can and get a small refund back.)
posted by metahawk at 2:42 PM on December 14, 2009 [1 favorite]
posted by metahawk at 2:42 PM on December 14, 2009 [1 favorite]
I was in a similar situation for a couple of years, though I work entirely for myself now. And I am confident in saying that using an accountant who specializes in working with freelancers will pay for itself in terms of the many additional deductions they will find for you. If you can't swing the cost now, can you do so in January or February? If so, just make a token payment for January 15 estimated tax, and get yourself an accountant in early 2010 before taxes are due in April.
posted by lgandme0717 at 5:57 PM on December 14, 2009
posted by lgandme0717 at 5:57 PM on December 14, 2009
This thread is closed to new comments.
posted by lunalaguna at 2:11 PM on December 14, 2009