Been freelancing for a few years now, but tax season always throws me for a loop. I’ve heard about tax brackets, but I’m not sure how they apply to self-employed income.
Anyone else struggle with this? How do you figure out which bracket you’re in when your income fluctuates month to month?
Tax brackets ain’t rocket science. Here’s what I do:
Track income and expenses monthly using a simple spreadsheet or accounting software.
At year-end, subtract your expenses from your income for your taxable profit.
Check the current tax brackets on the IRS site and see where your profit falls.
I set aside 30% of each payment for taxes. If you’re still confused, getting an accountant might help.
Tax brackets can be tricky with variable income. I estimate my yearly earnings and use that to figure out my bracket.
Remember, you’re taxed on profit, not revenue. Keep track of all business expenses to reduce your taxable income.
I set aside a percentage of each payment for taxes. It’s safer to overpay and get a refund than owe at the end of the year.
Taxes? I just write down what I make.
Stuff it in a box for the tax guy.
He does the math. I pay what he says.
I just guess and pay what I think I owe.
Never had any problems yet.
If the tax people come knocking, I’ll deal with it then.
I’ve been there. Tax brackets confused me for years.
Now I use a simple system. I track my income in a basic spreadsheet. Nothing fancy, just dates and amounts.
At the end of each quarter, I total it up. Then I subtract my business expenses. That gives me a rough idea of my taxable income.
I use the IRS website to check the tax brackets. They update them every year. I look at where my income falls and that’s my bracket.
For example, last year I made about $65,000 after expenses. That put me in the 22% bracket.
But remember, you don’t pay 22% on all your income. Only on the amount that falls in that bracket.
I set aside 25% of each payment for taxes. It’s usually more than I need, but I’d rather have a refund than a surprise bill.
It’s not perfect, but it works for me. Keeps the stress down when tax time rolls around.
Tax brackets can be a real headache, especially for us freelancers.
I keep a spreadsheet of my income and update it every month. This helps me guess my total for the year.
Then I use free online tax calculators. They’re not perfect, but give a rough idea.
Remember, we pay taxes on profit, not total income. So track those expenses too!
I set aside about 30% of each payment for taxes. Better safe than sorry.
It’s not foolproof, but it works for me. Might want to chat with an accountant if you’re really worried.