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I am kind of worried for us freelancers in a long-term perspective. Freelancers are considered self-employed citizens who are still bound to pay and receive government-mandated benefits. Are you still paying your government dues?
I definitely pay my taxes, if I don't, the government will come to my house and arrest me lol. Paying your taxes is a common thing if you live in the US, I'm not sure how it works anywhere else in the world, but that's how we do it here. If you have a regular 9-5 job where the company gives you a paycheck every 2 weeks, your taxes will be taken out of your check before it ever gets to you. This is great because they usually take out too much and you get a tax refund check, which is a good amount of money if you make a decent amount each year. The more money you make, the more money that is taken out of your checks and this means the more money they will refund you at tax time.
As for freelancers, we need to do all of our own taxes since we are basically business owners. It doesn't matter if you're incorporated or not, if you're working for yourself, you own a business and you need to run it professionally. Not paying your taxes means you're not following the laws set forth by your government, even if you don't like them, you need to pay them.
I actually have to pay personal and business taxes, even though I own my business and pay myself directly. As soon as the money leaves my business account and goes into my personal account, it's money earned and I have to pay taxes on it. For this reason, I try to use my business debit card for whatever I can and I only pay myself enough for bills each month. All of my lunches are written off because they are under $75 and I don't need a receipt to show proof that it was a business-related lunch lol.
If you make over $600 within a year, you need to claim it on your taxes. If you don't, you're at risk of getting audited, which is never a fun experience. I personally have never been audited and I hope I never do. I've heard of companies getting audited and they all say the same thing "It's a horrible time because all of your sales are under a microscope by the government and you likely have to pay fines for not claiming the right amount or not paying the proper amount in taxes".
To figure out what you need to do when it comes to taxes, you will need to go to your government's website and research the laws that are involved with taxes specifically for you. You can always contact an accountant and have them do all of your taxes, and I highly recommend this if you have a lot of sales coming in because it would just be easier on you. If you do hire an accountant, you won't have to stress out about what you need to claim and what you need to pay taxes on, they will figure out all of that and get your payments as low as possible. Remember, the less they can get you to pay, the more likely you will come back to them again and again
If you're worried about how much you will have to pay in taxes, just think of it this way. You will need to save around 50% of your money to pay for taxes, to pay for advertising in order to boost your sales and money to pay yourself. The other 50% should be saved for later in case you have something go wrong and you need a cash bubble to fall back on or if you want to invest in a new system or website that can make you more money down the road
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As the adage says, we cannot escape death and taxes for they are 2 things that come with life. I know that freelancers who are big earners should be paying taxes to avoid the problem of being hounded by the IRS. Since I am earning so little in a month that I don’t think I have to pay taxes for my annual earnings. I am just a part time freelancer for now but maybe when I go full time then I have to pay taxes.
I think taxes differ from country to country. But as a law-abiding citizen, you should pay your taxes. Declare what is due and what is right in order for you to avoid hassles when your government revenue checks up on your business.
Taxes are an interesting subject because it differs for everyone depending on your geographic location. As well as what your monthly income is as a freelancer. Currently, I don't meet the annual minimum requirements to file my income taxes as a freelancer. This goes for all the projects I'm currently active in. However, if my earnings do increase, I would definitely file and pay my taxes. So it all depends on the growth of myself as an individual freelancer.
Freelancers are considered as self employed citizens but some still pay taxes. In my country, as long as you applied for the taxation pin, you will be required to pay tax every year. I haven't filed or applied for the pin because of not having a job now, but I will also have to start paying taxes soon.
In my country, every online transactions are being checked. And that means one can be surely be paying the tax one way or the other. And that is something people have to be seriously looking at one transaction after another. You can easily see that eventually we have to pay taxes. Otherwise govt take the money from our bank. And that;s something is being happening these days plenty of times.
Freelancers who actually want to turn their freelancing career into a lifetime career should consider paying taxes as a self-employed individual. Declaring earnings and paying taxes on them make freelancing a legitimate business concern and entitles the individual to state benefits that are otherwise only available to the employed sector. In my country, some of the benefits include participation in social security, health insurance, and housing loan eligibility. That being said, I use my accounting and taxation knowledge to maximize exemptions and claims and pay the lowest taxes possible on my online earnings.
I agree that self employed taxes are lot better. Also if there are more things to do with self employment then the limited liability corporation forming is a good idea too. And it needs to be properly setup in that context. You can see that freelancing is something that needs to be properly understood. People are finding it harder to pay taxes as the inflation may affect. But you're right paying taxes on time is the way to work around this for sure.
In the US, freelancers are responsible for tracking and reporting their income. Plus, not only are the responsible for paying the employee side taxes that everyone must, they are must also pay the employer side taxes. And, thanks to Obamacare, we are required to have healthcare insurance, which is essentially a tax but paid to the insurance companies. That said, there are plenty of write-offs available, and a savvy taxpayer can get away with paying little to no taxes legally, if they know what they are doing.
Honestly, I don't pay my taxes now since I don't earn that much as a freelancer and haven't really found a good and stable job here in this industry. It's a good thing that here in my country, it's not as strict as the USA where if you failed to pay your tax, someone will knock on your door and arrest you. I know that it's bad not paying your taxes and government-mandated benefits but what can I do, I'm not earning that much to pay all of those. I will, someday, pay my duties for my country and be a good citizen by paying taxes.
When I was working with the government I was paying tax because it was mandatory to pay tax, in fact, the deducted tax fees at source but now I'm yet to do so.I will definitely do so when my earning online is worthwhile.I have just started out and I believe as I do more work of high paying, I will declare my earning to get the appropriate percentage to pay.
To be fair, in the United States, if you are a freelancer and they don't know it and you haven't been paying taxes, it won't be a huge issue because I doubt they have the resources to chase every single freelancer that is earning money from the internet. Of course, that doesn't mean they won't catch you but there is a chance that you may be able to get away with it.
I tend to agree with you here. I think I also read somewhere that you do not have to pay taxes as a freelancer until you hit $600 in income at every individual place you are freelancing per year. I will do more than that this year, but many people just use their freelancing for a little extra pocket change, so I do not think that the government will necessarily catch up with them. Still, it is most likely better to be safe than sorry and to pay your taxes whenever you legally should. Why risk it?
As you stated freelancers are considered as self-employed citizens and that's the reason they have to pay taxes. The laws concerning taxation are strict in my country. I may even be fined for not paying my taxes. Moreover, I earn more than I used to in my offline job. So, it is imperative that I pay the taxes. However, if you are not earning that much then I think that you don't need to file a tax form.
It's important to pay your taxes. No, you are not likely to be arrested if you don;t pay them, but who wants the IRS breathign down their neck? It is not fun to owe them money, but keeping good records as a freelancer is important to do. That way you can pay what is owed and when.
It's definitely not a nice thing to have the IRS breathing down your neck. I think the best thing to do is to just pay the tax that you owe to the government. There is no point trying to get away with it because most of the time you will get caught at some point and it's just not nice having to deal with the consequences.
I do because I am registered as a business. I need it so I can issue receipts to my clients and without it I wouldn't be earning as much anyway since larger clients wouldn't do business with anyone who couldn't issue receipts. For online work, I don't declare them because I don't make a lot from it anyway and it's mostly just supplementary. I think there are benefits to being official so it's better to look into it if you have that as an option.
I still pay the freelancing taxes because the amount falls into the tax paying bracket. You can see that is something many people need to be understanding. And they have to comply. That seems to be the way for managing the taxes. I am not sure if people can work around such type of the taxation stuff. But based on my experience it seems like CPA accountant can take care of things. So make sure you are clean on that side. And it should take care of the rest as well.
Basically, if your freelancing profits go with profits from a regular job like mine do? You would report it as additional income on your taxes. You file as single-payer, and then report additional revenue on your taxes in addition to your job income. Now - SHOULD you report that additional revenue? There are many differing opinions on this. Some people say NO, if your freelancing business is not doing very well. If the profits you see are anemic, like way under 3k a year? Then you shouldn't add this to your taxes when you file most will say.
If your freelancing profits or non-regular-job profits however, are at 5k or way over, a year? You MUST report that income. Just to be safe, I reported all of my extra income on my taxes in my early freelancing days once I started making over 1k. That included freelancer money, adsense money, etc. You might be able to get away with not reporting profits from a few jobs. Like maybe omitting 1 invoice in a year where you were paid $900 for work through paypal? But as long as you report everything else, you're good.
In my country, you're supposed to pay tax once you earn a certain threshold of income in a tax year. when you are self-employed. However, as I have not reached that threshold I am not worried. You should check your countries tax collection authority's website or visit its offices if you need specific details. As the comments show, it varies from country to country. However, if you have to pay, don't forget to include your business expenses like the cost of the internet, your computer e.tc
I actually do not want to answer this question but I have to be honest that I don’t pay any tax with my online earnings. As a freelancer, I need not report my earnings unless there is a law that mandates freelancers to file their income taxes. Maybe in the future, there will be a law but for now, I am enjoying the fruits of my labor 100% with no deductions whatsoever. I hope this state of condition will last for a long time.