FREELANCE TAXES (as promised in the comment section of 021):
If you do freelance work, that means you get a 1099 MISC and you get a number in box 7. That counts as self employment. So not only do you have to pay normal taxes on it (if your deductions don’t reduce your taxable income to 0), you have to pay self employment tax (no deductions can reduce this, generally).
If you are going to make a living off of freelance work, we will say that 25,000 is enough to live on just for this purpose, you can end up paying thousands of dollars in self employment tax, the tax in the example would be 3532, and that doesn’t include the normal tax you have to pay.
To avoid owing a lot of money at the end of each year, you can send in estimated taxes quarterly to the IRS (just keep good records for this along with business expenses).
-Kristen
Over 100 hours of tax training along with over 300 hours of actually doing tax returns.
(I can do tax returns even if we aren’t near each other *shameless plug*)
