The freelancers can’t hide from taxes and IRS
The IRS has new rules now and states that, if you earn 400 dollars from working as a freelancer, then you must pay taxes like a good boy. That’s no surprise. The amount of tax to be paid depends upon the considerations to take.
Each year, credits, percentages and exemptions change and that changes the amount of tax to be paid. Consult a tax professional in this case for the exact amount of tax. The tax amount should be paid regularly.
The self-employment taxes
After you receive the payment from the employer, you might notice that some money has been cut from every payment for Medicare and Social Security. The employer will then cut that amount from payment and the rate is 6.2 percent. You will have to pay the federal tax system yourself. Pay yourself to both sides with a combined 12.4 percent. President Obama has confirmed that for a yearly income below 106,800 dollars, two percent tax reduction is imposed. Above that, the tax must be paid.
State taxes and local taxes
The state taxes are different all across USA and it depends, which city you hail from. Check the state and local revenue service for establishing the expected taxes. Also, talk to the tax professional, who can guide you in paying full taxes. After that, handle the taxes yourself.
Pay the quarterly taxes
On the federal scale, the IRS requires you to pay the calculated quarterly taxes and if you think you need to pay 1000 bucks next year in federal taxes. Talk to the IRS for questioning about filing taxes. Talk to them about current tax year.
The quarterly taxes act like the pay roll taxes and you can pay in step by step process. You don’t have to pay all in one go.
Also, note that you may have some money to owe on the yearly tax return. The payments are just estimates.
You will face penalties, if you don’t pay the estimated quarterly penalties. You can run, but you can’t hide nigger.
The savings accounts
The taxes are figures represented in percentages. Add all the percentages together. Combine the IRS, state and local tax rates for cumulative tax for the fiscal year. Make the number a positive number. Make a new savings account and keep a good interest rate and put the tax blood money in it. After you get a freelance payment, pile the tax blood money in it. The interest you make on the savings accounts is yours; truly, madly and deeply. That is extra money left after taxes are taken away.
So, bad news for the freelancers, as they will have to pay from their hard earned money. But sadly, as soon as money appears, it disappears.
Do remember to make a savings account for keeping blood money in the account and not to confuse the blood money with regular payment.
This way, you have a clear conscience and a clear tax payment record.