I read a very interesting article (and a little scary actually!) about money, taxes and people who freelance for a living. Many people may not even consider themselves as freelancers, especially if they are working part time from home and not making regular incomes.
But according to the article, anyone who earns more than $1,000 a year should plan on paying estimated taxes every quarter. Many people who freelance fail to recognize that they are now basically running their own business--which means they must estimate how much they'll owe and pay taxes that full-time employees have taken out of their paychecks automatically. Freelance workers also have to pay self-employment taxes.
The IRS requires estimated taxes to be filed by the 15th of January, April, June and September each year. If your payment is late or isn't as much as it should be, the government can charge a penalty of 3.5%, based on the amount you owe. Underpay by $1,000, and you could be stuck with an extra $35 fee.
So while there are many benefits to being a freelancer, there are tax responsibilities and consequences to be aware of. Check out the article, and get some tips for saving and paying taxes if you are a freelancer, even part time.
