One reason that many people like the thought of working from home and freelancing is that you need to pay lower taxes. As a freelancer you pay taxes four times a year instead of monthly and many extra expenses can be taken as tax deductions. If you are involved in freelance employment these additional tax deductions can greatly benefit you.
One of the tax deductions which freelancers working at home are able to make is for a portion of their rent. If you work from home on freelance contract then the room where you work is considered like business property and is therefore eligible for tax deductions. Unfortunately this only counts if you are making a profit from your freelance business and you are not using your tax deduction from your home office to create a loss in your taxes.
If you are involved in freelance employment you should also have a look at the items you use - your stationery, magazines, books, computer accessories and find out what tax deductions you are able to get on these items.
There are also those items that you use for business that last longer than a year - such as your computer. You have two options for decreasing your tax with these items. You can take it as an expense in the first year (or the year it is bought) or you can spread the cost out over a couple of years taking into account depreciation. By taking it all off in the first year you will get a larger break in that year but you will not be able to use it as a deduction in the following years, or you could opt for a smaller deduction in each of the following years.
As someone involved in freelance employment you are also able to claim some expenses on professional memberships and seminars that are necessary for your work. For example if you are a freelance writer and belong to a writer's organization then you may be able to claim these fees from tax, or if you attend a seminar to do with your work then you can claim it from tax.
As a freelancer it is highly recommended that you find a professional tax consultant experienced in handling taxes for those involved in freelance employment and who has your best interests at heart to help you find all the tax benefits you can get from your freelance employment. Some one who is an expert in this field will be able to point out to you all the areas that you may not even know about as well as being able to offer you tax advice on some of the areas we have mentioned above. Take advantage of your tax breaks as a freelance worker and find someone who is an expert in tax law for freelance employment.
Act Now to Limit Your 2006 Tax Bill
Taxes are a necessary element of life and you really can't do anything to get away from them. If your goal is to avoid paying taxes completely, you are probably going to be disappointed. A better attitude is to have a goal of limiting your taxes as much as possible. Similar to many things in life, this means you need to plan ahead and take preventive steps.
The best time to address your tax situation is not in April each year. For those who love to file extensions, the best time is really not in October when your last automatic extension is quickly running out. The best time to deal with these issues is before the end of the tax year in which the taxes will be due, to wit, address your 2006 tax bill while it is still 2006!
Ideally, you should site down in January or February each year and plan out how to limit your tax bill for the upcoming year. Much like driving 55 on the freeway, this is a noble goal but is almost never done. Assuming you are like most other people, you get on with your life and the next thing you know, the year is almost up. Practically speaking, you still have time to address your taxes.
As I write this article, it is late October. While visions of Thanksgiving and Christmas may be starting to peak your interest, your 2006 taxes should also be wedging their way into your mind. Simply put, now is the time to take action to limit your tax liability so you can smile when you pay a small amount next April.
If you are having a good year, you should sit down with an accountant and figure out how to move money around to your benefit. If you don't have an accountant, consider your basic financial situation. Have you fully funded your retirement accounts? Have you made all your quarterly estimated tax payments? Are they accurate given your earnings this year versus last year? Do you have deductible items or needs you can pay for this year to lower your tax bill? The questions are fairly basic, but you should be addressing them now.
Much like going to a dentist to get your teeth cleaned to prevent cavities, limiting your tax bill is all about preventive maintenance. As we roll into November, now is the time to do it.
Both Rob Palmer & Richard A. Chapo are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Rob Palmer has sinced written about articles on various topics from tax, Writing and Computers and The Internet. Rob Palmer is the Editor of Freelance Work Exchange, the leading jobs site for contract professionals worldwide. Looking for a legitimate home business opportunity? Join Freelance Work Exchange for just $2.95 and get access to thousands of. Rob Palmer's top article generates over 9900 views. to your Favourites.
Richard A. Chapo has sinced written about articles on various topics from Finances, Tax Deductions and Tax. Richard A. Chapo is with BusinessTaxRecovery.com - providing information on .. Richard A. Chapo's top article generates over 22200 views. to your Favourites.