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If you're an independent interior decorator, you might be afraid of tax season. Tax filing can be intimidating, particularly if you work for yourself. But you can minimize your tax savings and even make tax season less stressful with a little planning and knowledge.
Knowing the tax laws and regulations that are relevant to them is one of the main challenges that freelancers have when it comes to taxes. Self-employed people get 1099s, not W-2s, like full-time employees do. This may complicate tax filing and increase the risk of penalties, fines, and even an audit if done incorrectly. Keeping abreast of the most recent tax laws and regulations that are relevant to your line of work is crucial.
We've put together a list of tax season survival tips specifically for independent interior decorators to help you make the most of your tax deductions and maintain IRS compliance.
1. Maintain precise records
Preserving precise documentation of all your earnings and outlays is the initial stage towards filing your 1099 employee taxes. You might get paid by several clients as a freelancer over the course of the year. It's important to record all of your income, including online and cash transactions.
Additionally, you need to maintain a record of all your expenses in order to claim deductions for your business expenses. This covers product purchases, professional development classes, website maintenance costs, and other related professional expenses. It also includes receipts, invoices, and bills.
Online resources abound that can assist you in efficiently managing your documentation. To create and manage your tax records, you can use programs like Google Sheets, Excel, and QuickBooks.
2. Determine your projected quarterly tax liability
It is your responsibility as a self-employed person to pay estimated quarterly taxes. Quarterly taxes are described by the IRS as "a way of paying taxes on income that is not subject to withholding tax." This implies that rather than waiting to pay taxes in full at the end of the year, you will now be required to pay taxes during the year based on your anticipated income.
A small business tax calculator can assist you in calculating your estimated quarterly taxes by estimating your tax liability based on your anticipated income. By April 15, June 15, September 15, and January 15 of the following year, you must pay your estimated quarterly taxes.
3. Optimize your deductions for taxes
Making the most of your tax deductions is a crucial part of filing taxes. If the costs are deemed necessary and reasonable for your business, you, as an independent interior decorator, qualify for a number of tax deductions. Some of the costs that are typically regarded as deductible are as follows:
- Supplies: This refers to any equipment or materials you buy to finish your design projects, such as paint, fabric, furniture, and additional accessories.
- Costs associated with marketing and advertising: These comprise any out-of-pocket expenditures you make to advertise your company, like making a website, printing business cards, and placing ads.
- Business insurance: You can write off any premiums you pay for business insurance, such as liability or equipment insurance, in order to safeguard your company.
- Travel expenses: You can write off travel-related expenses like lodging, meals, and airfare if you are traveling on business.
4. Make use of a self-employment tax estimate
A self-employed tax calculator is another useful resource for filing taxes. You can use a self-employed tax calculator to calculate your tax liability depending on your business's revenue, costs, and other variables.
You can estimate how much you'll owe in taxes when you file your tax return and how much you should set aside for taxes throughout the year with the help of the self-employed tax calculator. Additionally, you can modify your retirement account contributions and tax deductions, and the calculator will show you how these changes will impact your tax liability.
5. Get a tax preparer
One option if you're still having trouble filing your taxes is to get professional assistance from a tax accountant. You can gain from hiring a tax accountant in a number of ways.
A tax accountant can offer you expert guidance on how to optimize your tax savings, guarantee that all of your deductions are taken into account, and stay away from interest and penalties associated with taxes. Moreover, a tax accountant can represent you in front of the IRS and engage in negotiations on your behalf if you're behind on your taxes or are the target of an audit.
In conclusion
Particularly if you're an independent interior decorator, filing taxes can be intimidating. However, you can minimize your tax savings and make tax filing less stressful by keeping accurate records, estimating your quarterly taxes, maximizing your tax deductions, using a self-employed tax calculator, and hiring a tax accountant.
