Question

Freelance graphic artist receiving 1099 - how to avoid tax penalties owed

Forum|Forum|4 years ago
September 30, 2021
1 reply
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Hello! This past year i have been receiving freelance payments weekly which will result in a final 1099 at end of year. Since no tax is being taken out, are there other precautions and/or tax benefits for self-employed freelancers I should consider when filing? I am very concerned I will get hit by a large amount I owe. I save all my business receipts and plan on purchasing a new computer by year-end to use as a business expense, as well as it being a long overdue, much needed purchase. Thank you!

J

JandKit

Hi!

The only way to avoid tax and penalty is to pay taxes on a regular basis. If you freelance and are self employed, you must keep excellent records of all expenses AND pay estimated taxes based on your income for the year. The IRS requires that taxes be paid when received or earned.

Consider home in office and the purchase of equipment in the office may be used as deductions to mitigate your overall income as well as use of a vehicle or other expense incurred during the year for your business. Consideration includes postage and supplies as well as utilities. The law allows you take any number of expense deductions costing less than $2500 as well. Just keep records of all expenditures.

Further consider making quarterly payments to reduce taxes due at year's end. Here is a link for assisting you with this feature of self-employment.

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

JandKit

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