tag:blogger.com,1999:blog-1275996914383242610.post1189223162863501614..comments2023-10-31T02:27:18.201-07:00Comments on Her Every Cent Counts - a quarter life crisis, and change: Freelancer Woes: Taxes, Taxes, and More Taxesher every cent countshttp://www.blogger.com/profile/03559826632110489586noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1275996914383242610.post-89975263570878052152008-03-03T12:23:00.000-08:002008-03-03T12:23:00.000-08:00I would very, very strongly recommend checking int...I would very, very strongly recommend checking into what you need to do as a freelancer when it comes to city/state taxes, too.<BR/><BR/>When I was doing freelance writing in Seattle, I had to get a small business license and I had to pay additional taxes to both the city and the state.<BR/><BR/>In my current state, I have to pay state taxes, but not city taxes. I also don't have to have a small business license here.<BR/><BR/>In both states, the estimated taxes had to be paid on the same quartely schedule as federal taxes.<BR/><BR/>I like to keep enough money to pay my next two tax quarters in my checking account, along with living expenses for the same amount of time. That way, if a client pays late or a project gets cancelled, I'm not scrambling to withdraw money from my longer-term savings. I figure that if my income was so down for the year that I couldn't pay a third quarter out of my checking account, that would mean that I'd estimated too high and would consequently adjust the third/fourth payments downward to reflect what was actually happening. Fortunately, I've only had to do that once.<BR/><BR/>A couple of other comments, with respect to the advice from "living off dividends," above... I am not sure what kind of business setup you would have to have in order to count most of your income as an expense. I do know that my tax person has never suggested such a thing, and I would hesitate to try doing so unless someone knowledgeable and trustworthy explained how it was legal.<BR/><BR/>I do, however, agree with the importance of setting up an SEP-IRA or other retirement account. The 2007 tax year SEP-IRA rule is that you can put away 25% of your income or $45,000, whichever is smaller. They usually adjust the maximum a little bit each year, so it will probably be different for 2008.<BR/><BR/>The tax stuff can be complicated, but (speaking as someone who's freelanced for years), it's more than worth it. Good luck with your coming year!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1275996914383242610.post-642172872126601672008-02-22T03:52:00.000-08:002008-02-22T03:52:00.000-08:00you are allowed to expense a lot of your income as...you are allowed to expense a lot of your income as a self-employed person.<BR/><BR/>on top of that you might be able to sock away upto 40k a year in a SEP-IRA.<BR/><BR/>talk to a capable tax person NOW.NOW, not in a year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1275996914383242610.post-34824583687162425012008-02-21T09:11:00.000-08:002008-02-21T09:11:00.000-08:00My tax deductions from my paycheck are always too ...My tax deductions from my paycheck are always too large, and I end up getting a hefty refund in the spring. - Which I like...even though I miss out on interest. But it's less painful when I don't have to write them a check come April 15th<BR/><BR/>Your situation sounds like it'd get messy around this time of year!Alisonhttps://www.blogger.com/profile/11547734117520822506noreply@blogger.comtag:blogger.com,1999:blog-1275996914383242610.post-66840326457217759452008-02-20T12:01:00.000-08:002008-02-20T12:01:00.000-08:00Yikes, sounds like a pain. Of course you would ha...Yikes, sounds like a pain. <BR/><BR/>Of course you would have to pay quarterly estimates, otherwise everyone would just put their money in savings and pay later, earning interest in the meantime and the gov't would have no funds to run on.<BR/><BR/>I've never freelanced, but I hope you are a very good record keeper. I imagine that is key.<BR/><BR/>The self employment tax... does that cover stuff like FICA, Social security, and all that jazz? And don't forget to save up for your state taxes (if you have them)!Anonymousnoreply@blogger.com