May 28, 2020

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

For most employees, their employer withholds taxes from their paychecks before sending the money directly to the IRS and state government. These employees don’t have to worry about having to calculate their taxes every paycheck, because it automatically comes out, which could lead to them receiving a nice refund come next tax season.

If you’re self-employed, then you know that your taxes are not automatically withheld from your paychecks. You need to calculate how much taxes need to be withheld by making estimated tax payments either monthly or quarterly. Here are a few tax tips the self-employed should follow in order to stay up to date with the IRS.

  1. Determine your business income. If you expect to be in a higher tax bracket this year, you’ll want to review what deductions you qualify for in order to reduce your income since you will most likely be subject to the highest tax rate. 
  2. Decide when you want to receive your income. Being self-employed usually means you can determine when you receive your payment for the service that you rendered. This can help you estimate how much income you will have and when you need to make your estimated tax payments in order to stay compliant. 
  3. Review what medical deductions you qualify for. Make the most out of your medical insurance deduction by deducting yourself, spouse, or any dependents you have. This will adjust your total income for the year which could help you owe less at the end of the year or even possibly receive a refund. 
  4. Understand itemized deductions vs. business deductions. It’s important to understand the difference because taking business deductions instead of itemized deductions will help you reduce your total adjusted gross income and self-employment tax for the year. 
  5. Track your business mileage. Make sure to keep all business expenses that you incur throughout the tax year such as gas, oil, vehicle maintenance as well as other expenses that may apply. Once you have kept a record of these business expenses, you can deduct it from your tax return. 

If you need tax help, contact us for a free consultation.