Freelance work: tax advice please

NexusSix

I just landed a small freelance writing gig with an ad company.

Additionally, my wife and I just got raped on our tax return--we owe lots to Uncle Sam this year with our "regular job" income. :-(

Any who... after our tax return FUBAR for this year, I want to make sure I get all my ducks in a row with this new freelance work, so here's the deal:

1. I haven't had my first check cut yet.

2. This first check will the in the low to mid 3 figures, future payments might be bigger or smaller.

3. I anticipate a somewhat steady flow of work from this gig, but I can't say for sure yet how often I'll get a check cut. Depending on how much you make, doesn't some freelance work require filing on a quarterly basis?

4. For state info: I'm in Pennsylvania.

5. Wife and I both work full-time but make less than 100K/year--I'm hoping the freelance eventually puts us above 100K/year.

With the above in mind, if there are any freelancers out there who have some experience with dealing with taxes, any info/suggestions/advice would be greatly appreciated. Should I just make an appointment with H&R Block? Do the taxes myself? I'm just getting started with looking into this so info from freelancers who already know about this is much appreciated.

Thanks all.

corcorigan

I'm not in America, but having seen my Dad's wrestling with the British tax system when self-employed, I'd seriously suggest you hire an accountant. Might seem like a lot of money, but when you figure in the fines you'll get and the ridiculous amount of stress it generates, not to mention the time you'll waste, it's probably worth it.

Tw4win

I've run my own company for almost years now (all freelance work) and feel the need to give you this advice:


USE AN ACCOUNTANT!!!

Seriously, I can't stress this enough. Don't use H&R Block or some other tax firm. Go find a friendly, inexpensive accountant and have him help you. The first year I was in business I got anally raped by the IRS because I didn't know what I was doing (I thought I did) and decided that I'd do everything myself. After that I talked to a couple of other people in my industry (translation) and decided on an accountant.

A good accountant will cost a bit of $$$ in the beginning but once he/she sets everything up for you they don't cost that much. Especially if you only see them from that point forward around tax time.

The other advice I can give you is to get a tax ID number from the Feds and start paying taxes on your freelance work every quarter instead of once a year.

NexusSix

Given the tax mess we ended up with for this year's filing, hiring an accountant would probably be a good idea even if I didn't land this freelance thing.

Thanks for the advice! :-)

Thanatos

The easy way to do it is to set aside 30% of all the money you make into a savings account (an Orange savings by ING is good), and use that to pay your taxes.

It is, in fact, a good idea to hire an accountant to handle your taxes. However, if he is a good accountant, you will end up paying a lot less if you do most of the work yourself. The "work" in this case being maintaining files of your expenses, preferably broken down by month, and your revenue. Most business-related expenses are tax deductible. You can make this easy on yourself by establishing lines of credit at anyplace you commonly purchase goods/services from for your freelance work.