You know what's great about freelancing? Almost all. Pants are optional (most of the time), pets make better co-workers than most, and you can listen to Kenny G as loud as you want without fear of teasing or retaliation from your co-workers. (Ahem.) If you plan to go it alone as a freelancer or start your own business, you and you alone are responsible for making sure Uncle Sam gets his due. Unfortunately, the US tax system is one of the most grotesquely complex bureaucracies in the world, and for the uninitiated, filing a simple return as an independent contractor can quickly become a Byzantine nightmare.
Today I'm going to walk you through the fun and exciting world of taxes for freelancers. We'll touch on some general points before exploring some of the more juicy stuff, like what you can (probably) clear as well as pitfalls to avoid. Before we begin, however.
First, a very important disclaimer
Before going any further, it is important to note that this guide focuses exclusively on US tax law; While some of the cell phone number list advice may apply if you live elsewhere, this guide is primarily for freelancers living and working in the United States and may apply to foreign contractors working for US companies. I am not a lawyer. I am not accredited by any bar association (insert joke here) nor am I qualified to offer legal advice. Also, I am not a personal finance expert. As such, none of the content in this article should be considered a substitute for hiring an accountant or tax attorney who knows what they are talking about.
Please also note that, for the sake of simplicity, all of the tips and tricks below apply only to federal taxes, that is, money you owe the federal government. State tax laws vary widely from state to state, the complexities of which would obviously be impractical to discuss here. If you are in any doubt about any of the issues raised in this article, contact the IRS (or your state Treasury office). Contrary to popular belief, most people who work for the IRS are actually really great, friendly, and helpful people. Don't be afraid to contact them directly if - and when - things get darkly complicated.