More and more of us are freelancing in 2014 and the numbers are expected to go up dramatically in the next few years. Freelancing brings its own tax challenges that some may have not encountered before. We are not tax experts or CPA’s at Artisan Creative, but we do keep track of tax issues for freelancers and there have been some changes this year that might affect you.
If you were already freelancing in 2013, we hope you took our advice last year and:
- Tracked your mileage
- Created a dedicated office space
- Kept receipts for business expenses
- Made a list of clients who should send you a 1099
What’s different this year?
Home Office Deduction
In 2014, this deduction is simpler–still based on the square footage you use for your home office, now the IRS uses a flat $5 deduction for each square foot up to 300 or $1500. Much easier than figuring out the percentage of your household expenses for the year, but it may be less for you since it is capped.
If you earned over $200,000 last year as a freelancer, congratulations! The downside is that you will pay a 3.8% Medicare surtax on your income. But you did well!
Reducing Your Liability
Personal exemptions, allowed contributions to IRA’s, and contributions to health savings accounts were all raised for this tax year.
If you get to the end of the year owing self-employment tax, you should be paying that on a quarterly basis, so be sure to do so if you are having a great year or don’t have many deductions.
And if you get one, Happy Refund!
Wendy Stackhouse, Consultant for Artisan Creative