#Estimated tax payments freelancers

[phantomrose96]

I never understood the concept of "doing taxes". Taxes are just there and you just pay them, like everytime you buy something it includes a tax you have no other choice but to pay it, what do you have to do?? (I live outside the USA)

Oh fun! I get to explain U.S. taxes!!

(disclaimer: if you're a young adult in America who will have to learn to do taxes soon, please don't take this as a reason to panic. It IS absurd and it is kinda stressful the first time you do it, but you get a handle on it, and filing services like FreeTaxUSA walk you through it and do all the math parts for you. [Though learning the math parts yourself is kinda smart if you want to understand what you're doing.])

(other disclaimer: I might have some details wrong because I'm a random blogger and not an accountant. Accountants don't maul me please.)

So it's true that tax is included when you buy something, but the whole "doing taxes" in America is about income tax.

My experience is with a company that does withholdings (god bless all you freelance workers figuring it all out for yourselves.) Withholdings means my company will estimate how much tax I should owe and take it out of each paycheck to give to the government. So from a $1,000 paycheck, they might withhold $300 to pay taxes with, and gives you the remaining $700.

But that might NOT be right. So in April every American has to go crunch all the numbers and figure out if they paid the right amount :) (chances are the answer is no).

We get a form called a W-2 (god bless, I only have one W-2 because I work just one full time job) which includes *adjust glasses*: employer's name, your info, your federal ID number, your social security number (partially redacted), your total wages, your federal income tax withheld, your social security tax withheld, your medicare tax withheld, your deferrals with things like 401k contributions, tips, dependent care benefits, STATE income tax withheld (my state has a 5% income tax, on top of the federal income tax) AAAAAAND other boxes I won't even bother with.

You feed this into software (like turbotax, which CHARGES you to do this, but I used FreeTaxUSA which had free federal filing and almost-free state filing) - RIGHT, you file federal and state SEPARATELY. And you owe/receive SEPARATE amounts.

America has tax brackets, which means you owe x% of money you make between--actually, lemme get the fucking chart

fucking delightful.

So if you make $50,000, as a single filer, you owe 10% of the first $10,275, then you owe 12% of the next $31,500 (that's the amount between $10,275-$41,775, in the second row), then 22% of the remaining $8,225 (cough and then also state income tax if you have it cough). It's a little bit like filling up a thermometer, and the amount between each tick mark is what you owe x% of.

BUT WAIT. THERE'S DEDUCTIONS.

DEDUCTIONS are where most of the complexity comes from. Because there's like 1,000 random things that can give you a tax break. And there's also the standard deduction of $12,950.

What's the deduction? It's an amount of your income that qualifies as tax-exempt. So for the $50,000-earner, if they go with the standard deduction of $12,950, then only $37,050 of their income is taxable. So FORGET that calculation above, it's now 10% of the first $10,275, and 12% of the remaining $26,775

But if your itemized deduction is higher than your standard deduction, it's in your interest to calculate all your itemized deductions and use those, if they add up to more than $12,950

My itemized deductions were almost higher than the $12,950, between my state income tax contribution, property tax contribution, and mortgage interest payments. Other people might have a fuckton of other things--uh like dependents, business expenses, uh I'm not even sure since I skim past all the ones that don't apply to me.

OH, ALSO, THERE ARE OTHER FORMS YOU MIGHT HAVE TO PROVIDE BEYOND THE W-2. There are 1099-INT forms for interest made on bank accounts, 1099-DIV forms for money made from stock dividends, and others I don't even know about.

And all my knowledge and experiences comes as someone with relatively simple taxes by U.S. standards.

(The state taxes then have their own things and own deductions and whatever. They're usually kinda less complicated than federal, but they're a separate thing you have to file.)

And after you do all that, it figures out how much tax you SHOULD owe, how much you ACTUALLY paid, and tells you the difference that you owe/are owed.

I got back a decent amount of money in 2019 and 2020. 2021 was preeettty much even. 2022 I OWE a lot of money because, fuck it, I dunno.

[littleststarfighter]

You don't have to answer this at all, just wanted to give some perspective/info from someone who's been doing illustration commissions for about 15 years: in my opinion, it's always better to work backwards from an hourly rate rather than doing value-based pricing.

When working with private individuals as clients, US$30-50/hr is pretty standard for custom freelance stuff depending on experience, but since you're new to commissions I'd recommend offering a discount for the first few slots (both to get things moving, and also to give yourself lower-stakes "training" until you get used to the process—sometimes your workflow will change in ways you didn't expect under the conditions).

Personally, I prefer to offer a fixed quote based on my hourly rate, because that gets any kind of sticker shock out of the way. I estimate the amount of time it'll take me, add ~10% as a buffer, and apply my hourly rate. The fixed quote also gives me a little freedom not to stress out if it's taking more or less time than anticipated; I just make a note for my next quote and adjust accordingly.

The hourly rate might seem high to you, as it often does to people who are used to more traditional salary structures. But keep in mind that as a freelancer, you're also your own admin support: you don't bill for time spent emailing, researching, invoicing, etc. Tax can also get a bit complicated if you start doing a lot of freelance work.

My own base (non-commercial) rate is US$60/hr, because I've been doing this for a very long time. Frankly, the reason I have a lot of long-term repeat clients who pay my rate is because I communicate well and deliver on time. I set out a timeline up front with scheduled check-ins at various stages, and then I stick to that timeline no matter what. As someone who's also hired many freelance artists in the past, I know that reliability will win over genius every single time.

Speaking of timelines, ALWAYS be specific about the number and scope of revisions you offer. Depending on the project, I might phrase it as "2 rounds of revisions, with up to 1 hour of work per round" or similar. I bill anything beyond that scope at a higher hourly rate, usually about US$90/hr, billed by the half-hour. This also gives you leverage to say "Sure, I can add a whole new character and completely change the background; that will take about X hours which will put us into hourly billing territory at X rate." Either they'll back down or you'll be well compensated for the trouble, and most importantly (from a client services perspective) you've not told them no, you've given them options and reminded them what they've already agreed to.

In terms of payment plans, I normally require 50% up front (non-refundable) and 50% on final delivery. Since you haven't yet built up a rep as a commission artist, I recommend a lower up-front rate (maybe 20-30%). I do strongly advise getting SOMETHING up front to lock clients in and make sure they can't completely ditch if something happens. Plus, refusing to pay a small deposit is a major red flag.

I offer a 5% discount for complete payment up front, because it's honestly worth that 5% just to not have to deal with chasing people down and sending invoice reminders and whatnot.

I'm sorry to hear you've been going through such a tough time, and I hope this was helpful and not too overwhelming; it's just stuff I wish someone had told me when I was first starting out, and I think it's important for working artists to share info about business practices. I wasn't strict about a lot of things back then (like number of revisions), and it always ended up coming back to bite me. It might seem counter-intuitive, but I promise that thinking through and setting a lot of rules/boundaries up front will save you a lot of stress and trouble in the end.

I seriously want to thank you for this. It's incredibly informative not just for me but I'm sure other start out artists too. You've gone over things that I'd have no idea to do, thank you.

I'm certainly looking into how to pay tax as being in the UK I've never had to work that out before as we have it done for us in most jobs. So that would have been something I'd have forgotten about and it's not something you want to miss. I definitely have to time myself working as I don't know how long I take as I've never thought about that either. I just know I'm slow. It's interesting to see what you'd charge hourly as I see a lot of fan commissions having a low fixed rate depending on what you offer.  So definitely have to look whether to offer that or like you suggest a more freelance rate of pay. I'll admit US$30-50/hr made me gasp but that's because I'm used to working for UK minimum wage (roughly $13 a hr) so that seems a lot to me. Gives me something to think about. Though I worry about pricing people out to begin with what with being quite slow and a nobody. And yes! Never forget about getting a deposit. I learnt that the bad way decades ago when I did try to do a commission and was never paid. That's what made me nervous to even begin as I can be a pushover. So need to be more strict in what I can offer and of course revise too.

Seriously thank you this is so helpful. Like you say there's so much people don't share about getting into freelance and commission work. Getting that step up, even if it's me doing it, is something I've no idea how to even start on. I get people saying why aren't you working in art? But my answer is always 'how?' It's something no one's told me about. How to sell yourself and your work. Even commission work confused me. So please don't worry this is beyond helpful and I'm very grateful for you taking your time to help me. It's been a very rough few months but I'm trying to stay positive. This may help me while I find work. Much love, Lucy 💖

[abundancewithher]

Budgeting Tips

Hey young stars and hearts! As you all may know, i am on my big girl finance journey and if you didn’t know you do! Welcome or welcome back my loves! My name is Mimi if you are just coming across my posts.

My goal is to be a representation for the finance, manifestation, and money mindset for black girls and other POC. I spend a lot of money, that’s okay because i am changing my mindset about money. Instead of surviving in scarcity mindset, choosing to live in abundance mindset. Living in a state of abundance does require a little work.

As much as i changing my mindset into believing i am deserving of more money and that it flows to me effortlessly, I want to actually keep it and not over spend my money that flows to me easily by overindulging.

So, with that being said, here are some budgeting tips i will be implementing into my finances to improve my financial health:

- Assessing Your Financial Situation

Before you can create a budget, you need to understand your current financial situation. Take a peek into those bank credit card statements! This all includes:

- Bank statements

- Credit card statements

- Pay stubs

- Bills and receipts

2. - Calculate Your Monthly Income

Determine your total monthly income, this is very crucial. I cannot stress this enough! This includes your salary, any freelance or side income, rental income, dividends, and any other sources of income. Make sure to calculate your net income (after taxes) rather than your gross income. Write down an estimate in a monthly budget planner, if you don’t have one you can purchase one here, or write it on paper to stay organized.

3. - List Your Monthly Expenses

Make a list of all your monthly expenses. You actually might not have any, but what if you’re down to your last five dollars and Apple just takes that shit? That would be frustrating, right? because you didn’t know it was coming up or that you even had a subscription for anything at all, list that also! These can be categorized into fixed and variable expenses:

- **Fixed Expenses:** Rent or mortgage, utilities, insurance, car payments, and subscriptions.

- **Variable Expenses:** Groceries, dining out, entertainment, clothing, and miscellaneous expenses.

4. - Track Your Spending

For at least one month, track every penny you spend. This will give you a clear picture of where your money is going and help identify areas where you can cut back. Use a spreadsheet, or budgeting app, purchase a budget planner, or write it down in a notebook.

5. - Set Financial Goals

Define your financial goals. These could be short-term (e.g., paying off a credit card), medium-term (e.g., saving for a vacation), or long-term (e.g., retirement savings). Having clear goals will motivate you to stick to your budget.

6. - Create Your Budget

With your income, expenses, and financial goals in mind, create your budget. Allocate a specific amount of money to each category of expenses. Make sure to prioritize essentials (like housing, utilities, and groceries) before allocating money to discretionary spending (like entertainment and dining out).

Example Budget Categories:

Housing: $1,200

Utilities: $200

Groceries: $400

7. - Stay Committed and Be Flexible

Sticking to a budget requires commitment and discipline. Be patient with yourself and remember that it's okay to make mistakes. If unexpected expenses arise, adjust your budget accordingly. The key is to remain flexible and adaptable while staying focused on your financial goals.

These are tips I have created according to my digital budget planner, which can be purchased below. Again, building your finances takes time and discipline but it is very rewarding once you actually start to create a flow and a plan. I am implementing this asap to get ahead of my finances. Have fun with this of course!

Budget Planner

xoxo mimi💋

[meesefr]

do you have any advice on how to price comms in flight rising? I think i'm underpricing a lot right now

Oh boy, long post incoming. I obviously don't know your art/where you live/current prices so I'll try to apprach this based on how I price my work, and touching a bit on what to expect. Gonna make this a more generalised commission pricing post because I've seen this come up a lot.

Tl;dr version = Hourly rate (always above national minimum) + time it takes you on average + extra time calculated outside of pure drawing time + taxes

I personally price commissions on FR the same way I price coms/work anywhere else. For commissions I use flatrates which are in turn based on my hourly. Imo if you're doing FRC coms I'd ALWAYS price higher for gems/tr than for IRLC since their usage is confined to on-site. (I do cheapo FRC coms here and there for stuff like foddart too but it's with the explicit understanding that this is NOT a regular transaction. I would not recommend this for a long-term commission shop.) So for FRC coms I'd convert my standard IRLC price + FRC "tax". How much do I value gems/tr over actual IRL goods etc.

My studio hourly usually ranges from 25$ to 30$ but since most commissions are non-commercial work I stick to a 20$/h range for them. I like doing them and I still want my coms to be accessible to people, so I don't mind a small cut (drawing dragons is fun). So if say... a bust on average takes me about an hour and a half the strictest estimate would be 30$ + taxes. But you want to incorporate the possibility of complicated designs, taking longer for polish/make sure the work is up to your standards, reference gathering, small changes and client communication (transaction fees as well when applicable), so it's always good to leave breathing room. (I usually estimate at least another 40 minutes. It honestly ends up taking much longer most of the time. I've had coms take me 10+ hours longer than my priced estimate because I got too ambitious/excited with the illustration, don't be me.)

Now of course all of this stuff depends on your hourly rate too which is honestly a big debate in and on itself. I think the general commissioner audience is used to significantly lower rates than the industry side might. My main income comes from freelancing, where my rate is considered low end. Outside of Illustration, which is vastly underpayed, most designers and creative freelancers will usually have an hourly rate that ranges from 40-100$/h. 20-25$ is considered entry level. My personal recommendation would be to not go lower than 15-20/h if you're doing commissions professionally, even if you live in a place where that is considered a fairly high hourly wage. If you're still a student or your art doesn't really sell yet at those price ranges because of inexperience I think it'd be better to invest in practicing your fundamentals instead and do other work in the meantime. (Or find another platform! Might be an audience issue and not a skill one!)

Unfortunately most people doing coms (including myself) ARE underpricing. I've seen people that would be senior artists in a company if they were doing concept art instead have similar prices to mine, which is ridiculous. (The average mid level concept artist in-house makes 65k/y. People doing coms at the same skillrange often make >20k/y) But to some degree that is kind of inescapable because of how many other people you are competing with. So I don't doubt one bit that you are underpricing already. Illustrators and commission artists are vastly underpayed which means the average audience is conditioned to significantly lower prices.

Thankfully, specifically on FR from my experience the quality of commissioners you'll get is really high. I'm still not sure if you could get away with strictly fairly priced coms, unless you're very popular/your art is super in demand. But other than that, I do payment upon art delivery and have never had issues with a client except once. Communication/references/respect etc are also really good and folks tend to be very understanding and patient.

Be aware that the audience does get smaller the more fairly you price your stuff. I've kinda noticed that the folks commissioning me tend to be from a smaller pool of people that are also the ones commissioning the other artists with a similar skill level on FR that do IRLC coms. So a small pool of regular commissioners + other really skilled or better than you folks that are also fairly accessible/cheap by industry standards. You start seeing a lot of the same artist names pop up when you scroll down in the dragon's bio for references. You will probably not consistently fill all your slots but your clients will most likely end up being trustworthy/reliable and occasionally repeat customers. (Not surprisingly a lot of them are fellow artists/creatives too, y'all know the pain of the grind lol)

I wish you the best, anon. Sorry for kinda hijacking your question to go in-depth with this lol. I upped my prices a few months ago too and thankfully didn't see a decline in clients even if unfortunately I'm still underpricing. Commissions are just a tough game in general. I hope you'll be compensated fairly! If art is your main gig or you're planning on making it your full-time job, definitely look into freelancing instead long term. It's still tough but at least your rates will be much more acceptable. Take care and good luck!

(P.S. In case you're not paying taxes from commissions yet, check with an accountant if you're over the declare threshold. Different countries have different rules for this. If art is your main source of income you almost definitely have to essentially open a business in most places.)

[sbataxconsultants]

Tax Season Checklist

Tax season can be a demanding time for everyone, from small businesses and freelancers to individual filers. Proper preparation is key to ensuring a smooth tax filing process. Use this checklist as your guide through each step, making sure you’ve covered all essential items for your tax filing.

Gather Personal Information

 Social Security Numbers (SSN) for yourself and all dependents

Addresses and dates of birth

 Bank account and routing number for direct deposit/refund

 Last year’s Adjusted Gross Income (AGI) for electronic signature

Income Documents

 W-2 forms from all employers

 1099 forms for freelancers and independent contractors

 Interest statements (Form 1099-INT or Form 1099-OID)

 Dividend statements (Form 1099-DIV)

 Sales proceeds from stocks, bonds, etc. (Form 1099-B)

 Retirement plan distribution (Form 1099-R)

 Miscellaneous income records (prizes, rent income, etc.)

Deduction and Credit Documents

 Home mortgage interest (Form 1098)

 Real estate and personal property tax records

 Receipts for charitable donations and gifts

 Medical and dental expense records

 Educational expenses (Form 1098-T)

 Student loan interest paid (Form 1098-E)

 Childcare expenses (provider’s tax ID number required)

Health Insurance Information

 Marketplace coverage (Form 1095-A)

 Health coverage exemption certificate, if applicable

 Records of healthcare payments for Premium Tax Credit

Tax Forms and Worksheets

 Current year’s tax return forms and schedules

 Worksheets for itemized deductions, if applicable

Previous Tax Returns

 Copies of past tax returns (3-7 years recommended)

Bank Account Information

 Account numbers for any account into which you’d like a refund deposited

 Records for interest paid or earned, if applicable

Miscellaneous

 Notices from the IRS or other revenue systems, if received

 Record of estimated tax payments made during the year, if applicable

Review and Organize

 Review all documents to ensure they are complete and accurate

 Organize documents by category for easy reference

 Compile a list of questions or concerns for your tax advisor or software

File Taxes

 Choose the appropriate filing method for your situation (e-file or mail)

 Submit tax returns by the due date or file for an extension, if needed

Payment

 Schedule payment for any taxes owed, or confirm refund details

Follow Up

 Track refund status, if expecting one

 Store copies of filed tax returns and all relevant documentation securely

 Plan for any quarterly or future tax adjustments needed

 Confirm that checks have cleared or payments have been debited

Remember, this checklist is a general guide and your tax situation may require additional information. Always consult with a tax professional or IRS resources to ensure that all your tax responsibilities are fulfilled. 

Comments

[jackalxhearts]

losing my mind with taxes. hr block kept sending me returns that didn’t take into account all the estimated taxes I already payed...and like. the person doing the taxes isn’t reading all my documents. and when I spoke to her she didn’t seem to understand what I was saying when I was talking about making quarterly payments as a freelancer. then she tried to upsell me on another product and won’t let me view the forms she’s filling out now because I declined the product. I gave up and said never mind lmao and sent all my documents to a very simple no-nonsense CPA service where they seem to actually understand what estimated payments are (I didn’t use them earlier because idk they already know me at hr block but. this is nonsense)

[reitmonero]

Budgeting Apps for Freelancers: Manage Irregular Income

For freelancers, managing personal finances can feel like navigating a rollercoaster. Unlike salaried employees who receive a steady paycheck, freelancers often deal with fluctuating income streams. This inconsistency makes it harder to budget effectively. Fortunately, several budgeting apps have been designed with freelancers in mind, offering tools and features to help manage irregular income and unpredictable cash flow.

The Challenges of Freelance Finances

Freelancers face unique financial challenges that traditional employees may not experience. Without a regular paycheck, it can be tough to predict how much money will come in each month. This makes managing fixed expenses—such as rent, utilities, or insurance payments—more stressful. Additionally, freelancers must also account for self-employment taxes, which can be difficult to calculate and set aside without the help of a well-structured system.

The uncertainty surrounding freelance income necessitates a different budgeting approach. This is where budgeting apps come into play.

Key Features to Look For

Freelancers need a budgeting app that can handle irregular income and still allow for future planning. Here are a few features that are particularly helpful:

Income Forecasting – A good budgeting app for freelancers should offer income forecasting tools. This helps predict future earnings based on historical data and gives freelancers an idea of how much money they might expect in the coming months.

Expense Planning – Freelancers often face variable expenses, from office supplies to business travel. Budgeting apps that offer detailed expense tracking can help freelancers keep an eye on their costs, especially when business-related expenses blend with personal ones.

Saving for Taxes – A key challenge for freelancers is saving enough to cover quarterly tax payments. Budgeting apps that include a tax-saving feature or allow users to create separate savings categories for taxes are invaluable for staying on top of this financial responsibility.

Cash Flow Tracking – Irregular income means cash flow tracking is essential. A budgeting app that helps users manage the timing of payments—both incoming and outgoing—ensures that there’s always enough money available to cover essential bills, even during lean months.

Best Apps for Freelancers

YNAB (You Need A Budget) – YNAB is one of the best apps for freelancers because it’s designed to handle irregular income. Its system encourages users to assign each dollar a job, whether it’s for rent, groceries, or tax savings. YNAB’s interface also helps freelancers plan for lean months by focusing on building up a buffer of money.

QuickBooks Self-Employed – This app is tailored specifically for freelancers and gig workers. QuickBooks Self-Employed automatically tracks mileage, business expenses, and income, separating personal and business finances with ease. It also includes features for tracking estimated taxes, making it a comprehensive tool for managing freelance finances.

PocketGuard – PocketGuard is another excellent option for freelancers who want to keep a close eye on their spending while managing irregular income. The app lets you create specific spending categories and even connects to your bank accounts for real-time updates on cash flow.

Wave – Wave offers free accounting and invoicing tools that are especially beneficial for freelancers. While not a traditional budgeting app, it helps track income and expenses while allowing users to invoice clients and accept payments online.

[laylaleigh]

Best Tax Preparation Services for Maximizing Your Refund in 2024

Navigating the complexities of tax preparation can be daunting, but with the right service, you can maximize your refund and avoid costly mistakes. As we approach 2024, it’s crucial to find the best tax preparation service that fits your needs, whether you're a small business owner, a freelancer, or a salaried employee. The goal is to ensure you not only comply with tax regulations but also take full advantage of deductions and credits to optimize your refund.

Why Choose Professional Tax Preparation Services?

In 2024, tax laws are more intricate than ever, and attempting to file your taxes without professional help can lead to missed opportunities for savings. Professional tax preparers offer deep insights into tax deductions, credits, and exemptions you might not be aware of. They also provide peace of mind by ensuring that your filing is accurate and compliant with the latest regulations.

Here’s why choosing a professional tax preparation service is crucial:

Maximized Refund Potential: Experts know the ins and outs of tax law, ensuring you receive every deduction you’re entitled to.

Accuracy and Compliance: Filing errors can lead to penalties or audits. Professionals reduce this risk significantly.

Time Efficiency: Tax preparation services handle the heavy lifting, allowing you to focus on other aspects of your life or business.

Audit Support: Many services offer audit protection, meaning they’ll assist you if the IRS or local authorities question your filing.

Top Features to Look for in a Tax Preparation Service

To get the most out of your tax return in 2024, you need to carefully select a service that aligns with your financial situation. Here are some of the key features you should look for:

1. In-depth Knowledge of Current Tax Laws

The tax landscape changes yearly, and 2024 is no different. The best tax preparation services stay updated with new laws, including changes in deductions for things like childcare expenses, business expenses, and charitable donations. A thorough understanding of these updates ensures that your filing is optimized to the fullest.

2. Personalized Services for Different Filing Situations

Everyone’s tax situation is unique. Whether you're a single filer, married couple, or a business owner, your tax preparation service should offer personalized advice and solutions. Look for services that cater to specific categories such as:

Small Business Owners: Assistance with self-employment taxes, business expense deductions, and estimated tax payments.

Freelancers and Gig Workers: Help with tracking income from multiple sources and managing quarterly estimated tax payments.

Individuals with Investments: Services that specialize in capital gains, dividends, and interest income.

3. Transparent Pricing Structure

One of the most important factors when choosing a tax preparation service is cost. While it’s tempting to go for the cheapest option, remember that value for money is what truly matters. Reputable services offer transparent pricing without hidden fees, and they should explain upfront how much you’ll be charged based on your tax situation.

4. Fast and Easy Filing Options

Many of the top tax preparation services offer e-filing, which is not only convenient but also faster in terms of receiving your refund. Some services provide mobile apps or online platforms, allowing you to upload your documents, communicate with your preparer, and review your return from anywhere.

5. Year-Round Support

Taxes don’t just happen in April. Look for services that offer year-round assistance, especially if you’re running a business or expect to make significant financial decisions that could affect your tax return. Year-round support means you can get answers to questions and make adjustments throughout the year, helping you avoid surprises during tax season.

Top Tax Preparation Services for Maximizing Refunds in 2024

Here’s a breakdown of some of the best tax preparation services available in 2024:

1. TurboTax

TurboTax continues to be a leading name in tax preparation. Their user-friendly interface combined with real-time human help makes them a popular choice for both individuals and businesses. TurboTax also offers a maximum refund guarantee, which ensures that you’ll get every dollar you deserve. With features like live CPA assistance and an intuitive mobile app, TurboTax is ideal for those who prefer a hybrid of self-filing and professional advice.

2. H&R Block

H&R Block is known for its comprehensive approach to tax preparation. They offer in-person, online, and drop-off services, making it a flexible option for all kinds of filers. H&R Block also specializes in handling more complex tax situations, such as those involving investments or rental properties. Their audit assistance is another valuable service, offering peace of mind in case the IRS comes knocking.

3. Jackson Hewitt

If you’re looking for a more budget-friendly option, Jackson Hewitt provides reliable services without the hefty price tag. Their flat-rate pricing and guarantee to beat competitors' prices make them a great option for those looking to save on preparation costs. Additionally, Jackson Hewitt’s early refund options allow you to access part of your refund before tax season officially begins.

4. TaxSlayer

TaxSlayer is perfect for those who want an affordable, DIY approach to tax filing. Their platform is easy to use, and they offer comprehensive support for freelancers and self-employed individuals. TaxSlayer also provides audit assistance and a 100% accuracy guarantee, ensuring that you can file with confidence.

5. CPA Firms and Local Tax Experts

For those with complicated financial situations or who run small businesses, hiring a local CPA or specialized tax firm may be the best option. While this approach is often more expensive, the personalized service and in-depth knowledge that certified professionals provide can maximize your refund more effectively than DIY services.

Maximizing Your Tax Refund: Key Strategies

Here are several key strategies that can help you get the most out of your tax refund:

1. Claim All Available Deductions and Credits

Many taxpayers miss out on valuable deductions because they’re unaware of them. Common deductions include home office expenses, medical expenses, and charitable donations. Additionally, tax credits like the Earned Income Tax Credit (EITC) or Child Tax Credit can significantly boost your refund.

2. Stay Organized Throughout the Year

Maintaining an organized record of your income, expenses, and deductions throughout the year will streamline the tax filing process. Use apps or spreadsheets to keep track of expenses related to work, charitable donations, and any significant purchases that may qualify for deductions.

3. File Electronically for Faster Refunds

The IRS recommends filing electronically for a faster refund. E-filing is not only quicker, but it also reduces the chances of errors, which could delay your refund. Many tax preparation services offer secure electronic filing as part of their packages.

4. Take Advantage of Retirement Contributions

If you contribute to retirement accounts like an IRA or 401(k), you can benefit from tax deductions. Contributions made by the end of the tax year can lower your taxable income, resulting in a larger refund.

Conclusion

Choosing the right tax preparation service is crucial to maximizing your refund and minimizing stress during tax season. In 2024, there are numerous options available, ranging from DIY platforms to professional services that provide hands-on support. By selecting a service that meets your unique needs and taking advantage of the strategies outlined here, you can ensure a smooth filing experience and maximize your tax refund.

[susmithabusiness]

2024 Salary Paycheck Calculator

Employees can use free tools like hourly and salary paycheck calculators to determine their net pay based on taxes and withholding. These calculators provide a comprehensive view of an employee's gross pay, which includes base salary, overtime, commission, bonuses, and more. By subtracting federal and state taxes, as well as allowances requested by employees, users can gain a clearer understanding of their earnings. Additionally, companies can learn how to automate payroll using QuickBooks for efficiency.

Why Accurate Paychecks Matter

Accurate paycheck calculations are crucial for both employees and employers. Beyond simply ensuring employees are paid correctly, employers are legally required to adhere to federal, state, and local wage laws. Non-compliance can result in hefty fines, potentially reaching thousands of dollars. One common violation is the failure to properly compensate employees for overtime. States like California, New York, Texas, and Florida have stringent labor laws, often surpassing federal regulations. Using a paycheck calculator can help employers accurately calculate wages, deductions, and overtime, ensuring compliance and minimizing the risk of costly errors.

Steps to Calculate Net Income

1. Determine Total Income:

Sum up all sources of income, such as wages, salaries, bonuses, freelance work, interest, dividends, etc.

Ensure all figures are accurate and up-to-date.

2. Calculate Gross Income:

Formula: Gross Income = Salary + Wages + Bonuses + Other Income

3. Subtract Pre-Tax Deductions:

Pre-tax deductions may include retirement savings (e.g., 401(k) or IRA), health insurance, and other benefits.

4. Calculate Taxable Income:

Formula: Taxable Income = Gross Income - Pre-Tax Deductions

5. Determine Taxes:

Calculate federal, state, and local taxes, as well as Social Security and Medicare taxes, based on the taxable income.

6. Subtract Taxes:

Formula: Income After Taxes = Taxable Income - Taxes

7. Subtract Post-Tax Deductions:

Post-tax deductions may include loan repayments, savings, and other expenses.

8. Estimate Net Income:

Formula: Net Income = Income After Taxes - Post-Tax Deductions and Expenses

How to Use a Paycheck Calculator

Follow these steps to use a paycheck calculator for both salaried and hourly employees:

1. Enter Employee Information:

Input the employee’s name and state of residence, which helps determine local taxes.

2. Enter Salary Details:

Select the pay type (Hourly or Salary). For hourly employees, input the hourly wage and hours worked, including overtime. For salaried employees, input the total earnings for the pay period.

Choose the pay date and frequency (weekly, biweekly, etc.).

3. Include Extra Payments:

Input bonuses, commissions, and overtime pay (if applicable). Note: California employees may not have double-time pay included

4.Enter Federal Tax Details:

Input the employee’s filing status, number of allowances, and any additional withholding. This information can be found on the employee's W-4 form.

5.Enter State Tax Details:

Include state withholding information based on the employee's state W-4 form.

6.Calculate Paycheck:

Click "Calculate" to determine the employee’s net pay for the given pay period.

Understanding Tax Withholding and Payroll Deductions

Federal Income Tax Withholding:

Federal tax withholding is a portion of the employee's wages withheld for federal taxes. It is determined by the employee’s gross pay, filing status, and exemptions, and it can be adjusted by updating their W-4 form.

FICA Withholding:

This includes Social Security and Medicare taxes. Employers are responsible for withholding a fixed percentage from employees’ pay and making a matching contribution.

State and Local Income Tax Withholding:

State and local taxes vary based on location and fund services like education, transportation, and public safety. Employers should ensure they are familiar with state and local tax laws to accurately withhold taxes.

Benefit Deductions:

Pre-tax benefits, such as retirement savings and health insurance, reduce taxable income and provide financial benefits to employees.

Wage Garnishments:

Employers are required by court order to garnish a portion of an employee’s wages for debts like child support or unpaid taxes. It’s essential to follow these orders and ensure correct deductions.

Accurate paycheck calculations are vital for complying with labor laws and ensuring fair compensation for employees. By using a paycheck calculator and following these steps, businesses can streamline payroll processes and avoid legal complications.

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Understanding IRS Debt: Causes, Consequences, and Solutions

IRS debt, or tax debt owed to the Internal Revenue Service, can be a significant burden for individuals and businesses alike. It arises when taxpayers fail to pay their taxes in full by the due date. This can happen for a variety of reasons, including financial hardship, underreporting income, or simply misunderstanding the tax code. Regardless of the cause, owing money to the IRS can lead to serious financial and legal consequences. This article will explore the causes of IRS debt, its consequences, and the various solutions available to taxpayers.

Causes of IRS Debt

Financial Hardship: One of the primary reasons taxpayers fall behind on their taxes is financial hardship. Job loss, medical expenses, or other unexpected financial challenges can make it difficult to pay taxes on time.

Underreporting Income: Failing to report all income, whether intentionally or unintentionally, can result in owing more taxes than initially calculated. This often occurs with freelance work or income from side gigs that taxpayers might overlook.

Misunderstanding the Tax Code: The U.S. tax code is notoriously complex, and many taxpayers make honest mistakes when filing their returns. Miscalculations, missed deductions, or misunderstanding tax credits can lead to an underpayment.

Failure to File: Some taxpayers do not file their tax returns on time, either due to procrastination or uncertainty about their tax situation. Failure to file can result in penalties and interest, increasing the overall debt.

Inadequate Withholding or Estimated Payments: Employees who do not withhold enough from their paychecks or self-employed individuals who fail to make adequate estimated tax payments can find themselves owing money at tax time.

Consequences of IRS Debt

Penalties and Interest: The IRS imposes penalties for late filing and late payments, which can significantly increase the amount owed. Interest accrues on unpaid taxes from the due date of the return until the date of payment in full.

Tax Liens: If the debt remains unpaid, the IRS can file a federal tax lien against the taxpayer’s property. A lien gives the IRS a legal claim to the taxpayer's property as security for the debt, affecting credit scores and making it difficult to sell or refinance property.

Tax Levies: The IRS has the authority to seize assets through a tax levy if the debt is not resolved. This can include garnishing wages, seizing bank accounts, or taking other property.

Credit Damage: Unpaid IRS debt and resulting liens can severely damage a taxpayer’s credit rating, making it harder to obtain loans, mortgages, or other forms of credit.

Legal Action: In extreme cases, the IRS may take legal action against taxpayers who fail to address their tax debt. This can result in court judgments and further financial and legal complications.

Solutions for Managing IRS Debt

Payment Plans: The IRS offers several payment plan options for taxpayers who cannot pay their debt in full. An Installment Agreement allows taxpayers to pay their debt in monthly installments over a period of time. There are short-term and long-term installment agreements depending on the amount owed and the taxpayer’s financial situation.

Offer in Compromise: An Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS to settle the debt for less than the full amount owed. This option is available to taxpayers who can demonstrate that paying the full amount would cause significant financial hardship. The IRS considers factors such as income, expenses, asset equity, and ability to pay when evaluating OIC applications.

Currently Not Collectible Status: Taxpayers experiencing severe financial hardship may qualify for Currently Not Collectible (CNC) status. This temporarily halts collection activities, although penalties and interest continue to accrue. To qualify, taxpayers must provide detailed financial information to the IRS.

Penalty Abatement: In some cases, taxpayers may be eligible for penalty abatement, which can reduce or eliminate penalties if they can show reasonable cause for failing to pay on time. Reasons might include serious illness, natural disasters, or other extenuating circumstances.

Tax Relief Programs: Various tax relief programs are available to assist taxpayers in managing their debt. Innocent Spouse Relief protects taxpayers from being held responsible for their spouse’s tax debt in cases of fraud or error. Injured Spouse Relief allows a spouse to recover their portion of a tax refund if it was applied to their partner’s debt.

Bankruptcy: As a last resort, some tax debts can be discharged through bankruptcy. However, this option is complex and subject to strict requirements. Not all tax debts are dischargeable, and taxpayers should consult with a bankruptcy attorney to understand their options.

Preventing Future IRS Debt

Proper Withholding and Estimated Payments: Ensuring that proper amounts are withheld from paychecks and making accurate estimated tax payments can prevent future tax debt. Using the IRS’s withholding calculator or consulting a tax professional can help determine the correct amounts.

Accurate Record-Keeping: Keeping accurate records of income, expenses, and deductions throughout the year can help ensure that tax returns are filed correctly and completely, reducing the risk of underreporting income or missing deductions.

Professional Tax Assistance: Working with a qualified tax professional can help taxpayers navigate the complexities of the tax code, file accurate returns, and identify potential deductions and credits.

Timely Filing and Payment: Filing tax returns on time and paying taxes when due is the simplest way to avoid IRS debt. Setting reminders and using electronic filing options can help ensure timely compliance.

Conclusion

IRS debt can be daunting, but understanding its causes and consequences, along with the available solutions, can help taxpayers manage and resolve their obligations. By taking proactive steps to prevent future debt and seeking professional assistance when needed, taxpayers can maintain their financial health and avoid the serious repercussions of unpaid taxes.

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Are there any specialized tax services for freelancers in Salem?

Freelancers in Salem often face unique financial challenges that require specialized tax services. For those seeking Accounting and Tax Services in Salem, several tailored services can address the specific needs of freelancers:

Income Tax Preparation: Freelancers typically have diverse income streams and complex tax situations. Accounting firms in Salem offer specialized Accounting and Tax Services in Salem to assist with accurate income tax preparation, ensuring all sources of income are reported correctly and deductions are maximized.

Expense Management: Tracking and categorizing business expenses is crucial for freelancers to claim allowable deductions and reduce taxable income. Firms in Salem provide dedicated services for expense management, helping freelancers maintain thorough records and optimize their tax returns.

Quarterly Estimated Taxes: Freelancers are required to make estimated quarterly tax payments to avoid underpayment penalties. Specialized Accounting and Tax Services in Salem include calculating these payments and providing guidance on timely submissions to ensure compliance.

Tax Planning: Effective tax planning is essential for freelancers who experience variable income. Accounting firms in Salem offer strategic tax planning services to help freelancers manage their finances throughout the year, plan for tax liabilities, and avoid unexpected tax burdens.

Audit Assistance: In the event of a tax audit, freelancers may need professional representation. Firms in Salem offer audit assistance and support, ensuring that all documentation and financial records are in order and helping to navigate the audit process smoothly.

Retirement and Savings Planning: Freelancers must independently plan for retirement and savings. Accounting and Tax Services in Salem include retirement planning advice, helping freelancers set up tax-advantaged accounts and plan for future financial security.

By leveraging these specialized Accounting and Tax Services in Salem, freelancers can effectively manage their tax responsibilities and achieve better financial outcomes.

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Mastering Your Finances: Budgeting Tips for Freelancers

Managing finances as a freelancer presents a unique set of challenges and opportunities that require strategic planning and disciplined budgeting practices. Freelancers often experience fluctuating income levels due to the nature of project-based work, making it essential to adopt proactive financial management strategies.

At the core of freelancer budgeting is the need to understand and effectively manage cash flow. Unlike traditional employment with a predictable salary, freelancers must navigate income variability based on client contracts, project timelines, and market demand. It's crucial to establish a system for tracking income from different sources and allocating funds accordingly. Segmenting income into categories such as business expenses, taxes, savings, and personal spending allows freelancers to prioritize financial obligations and plan for future financial goals.

Setting aside a portion of each payment for taxes is a critical aspect of freelancer budgeting. Unlike employees who have taxes withheld from their paychecks, freelancers are responsible for paying taxes on their income throughout the year. This requires estimating tax liabilities, making quarterly estimated tax payments, and maintaining records of deductible expenses to minimize tax liability. Creating a separate savings account specifically for taxes ensures freelancers have funds readily available when tax deadlines approach.

Creating a comprehensive budget is essential for freelancers to manage both fixed and variable expenses effectively. Fixed costs may include rent, utilities, insurance premiums, and subscriptions, while variable expenses encompass marketing and advertising, professional development, equipment upgrades, and client acquisition costs. By identifying and categorizing expenses, freelancers can allocate resources strategically, identify areas for potential cost savings, and maintain financial stability during lean periods.

Building and maintaining an emergency fund is crucial for freelancers to cushion against income fluctuations and unexpected expenses. Financial experts recommend saving at least three to six months' worth of living expenses in an easily accessible account. This emergency fund provides a financial safety net, offering peace of mind and flexibility to navigate periods of reduced income or unforeseen financial challenges without relying on credit or disrupting long-term financial goals.

Investing in retirement savings is another important aspect of freelancer financial planning. While freelancers do not have access to employer-sponsored retirement plans like 401(k)s, they can contribute to Individual Retirement Accounts (IRAs) or Simplified Employee Pension (SEP) IRAs. Contributing to retirement accounts not only allows freelancers to save for the future but also provides potential tax advantages, such as deductible contributions or tax-deferred growth.

Embracing digital tools and technology is instrumental in streamlining financial management for freelancers. Utilizing accounting software, budgeting apps, and digital platforms for invoicing and expense tracking helps freelancers stay organized, monitor cash flow, and automate administrative tasks. These tools not only save time but also provide valuable insights into financial trends, profitability analysis, and client payment histories, enabling freelancers to make informed decisions and optimize their business operations.

Negotiating fair rates and setting clear payment terms with clients are essential strategies for freelancers to maintain a steady income stream and protect against payment delays or non-payment. Diversifying client relationships and expanding professional networks can also help freelancers mitigate the risks associated with dependency on a single client or industry sector.

In conclusion, freelancer budgeting is a dynamic process that requires proactive financial management, disciplined budgeting practices, and a strategic approach to income generation and expense management. By adopting these strategies, freelancers can navigate the complexities of self-employment, achieve financial stability, and build a thriving and sustainable freelance career.

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Tax Return Checklist: Essential Steps for a Stress-Free Filing Experience

As tax season approaches, preparation is key to ensuring a smooth and stress-free filing experience. Our comprehensive Tax Return Checklist is designed to guide taxpayers through the essential steps, making the process more manageable and efficient.

1. Gather Personal Information: Start by collecting all necessary personal information. This includes Social Security numbers for you, your spouse, and any dependents, as well as your tax ID number if you are self-employed or have a business. Having this information readily available will streamline the filing process.

2. Collect Income Documents: Ensure you have all required income documents, such as W-2 forms from employers, 1099 forms for freelance or contract work, and records of other income sources like investments, rental properties, and unemployment benefits. Accurate income reporting is crucial for a correct tax return.

3. Organize Deduction and Credit Records: Maximize your refund by identifying eligible deductions and credits. Gather records for deductible expenses such as mortgage interest, student loan interest, medical expenses, charitable contributions, and education costs. If you qualify for tax credits, ensure you have the necessary documentation to support your claims.

4. Review Last Year's Tax Return: Reviewing your previous year's tax return can provide valuable insights and help identify potential deductions or credits you might have overlooked. It can also serve as a reference for any carryover items, such as capital losses or charitable contribution carryovers.

5. Keep Track of Estimated Tax Payments: If you’ve made estimated tax payments throughout the year, ensure you have accurate records. This includes quarterly payments for self-employed individuals and payments made for investment income. Proper documentation will help avoid overpayment or underpayment issues.

6. Prepare for New Tax Law Changes: Stay informed about any tax law changes that may impact your return. This includes adjustments to tax brackets, changes in deduction limits, and new tax credits. Understanding these changes ensures you can take full advantage of any new opportunities for savings.

7. Choose the Right Filing Status: Selecting the correct filing status is critical as it affects your tax rates and eligibility for certain deductions and credits. Determine whether you should file as single, married filing jointly, married filing separately, head of household, or qualifying widow(er).

8. Consider Professional Help: If your tax situation is complex, consider seeking help from a tax professional. They can provide expert advice, ensure accuracy, and potentially identify additional savings. A professional can also assist with tax planning strategies for the future.

9. E-Filing and Direct Deposit: Opt for electronic filing (e-filing) and direct deposit to expedite your refund. E-filing is faster and more secure than paper filing, and direct deposit ensures you receive your refund quickly and safely.

10. Double-check and File on Time: Before submitting your tax return, double-check all information for accuracy. Ensure all required documents are included and that there are no errors. Filing on time is crucial to avoid penalties and interest charges.

By following this Tax Return Checklist, taxpayers can approach the filing season with confidence and ease. Preparation and organization are key to a stress-free tax return experience, allowing you to focus on maximizing your refund and achieving financial well-being.

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Navigating Tax Implications of Freelance and Gig Work: A Comprehensive Guide 💼📊

Freelancing and gig work offer flexibility and independence, but they also come with unique tax challenges. Here’s how to navigate the tax landscape effectively:

1. Understand Your Tax Obligations

Self-Employment Tax: Freelancers are responsible for both employer and employee portions of Social Security and Medicare taxes.

Income Tax: Report all earnings, including payments received via apps and digital platforms.

2. Keep Accurate Records

Track Income: Maintain records of all payments received.

Document Expenses: Keep receipts for business-related expenses, such as office supplies, software, and travel costs.

3. Deductible Expenses

Home Office: Deduct a portion of your home expenses if you have a dedicated workspace.

Business Supplies: Office supplies, equipment, and software are deductible.

Travel and Meals: Expenses related to business travel and client meetings can be deducted.

Health Insurance: Self-employed individuals can deduct health insurance premiums.

4. Quarterly Estimated Taxes

Estimate and Pay Quarterly: Avoid penalties by paying estimated taxes four times a year.

Calculate Accurately: Use last year’s tax liability as a guide or consult with a tax professional.

5. Retirement Savings

SEP IRA or Solo 401(k): Save for retirement while reducing taxable income.

6. GST Compliance

Goods and Services Tax (GST): Register for GST if your annual turnover exceeds the threshold limit and comply with filing requirements.

7. Professional Help

Hire an Accountant: Consider working with a tax professional to ensure compliance and optimize your tax situation.

Conclusion

Freelancing and gig work offer many advantages, but it’s crucial to stay on top of your tax obligations. By understanding your responsibilities, keeping accurate records, and leveraging available deductions, you can minimize your tax liability and maximize your earnings.

Stay informed and proactive to enjoy the financial benefits of freelance work without the tax-related stress.