June 11, 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.

As a 1099 earner, it can sometimes seem like there are more rules to follow when filing taxes and more responsibilities to manage compared to someone that is a W-2 earner. It can even seem confusing at times when filling out certain paperwork or figuring out how to report all your income to the IRS. 

Here are a few simple tips to help you get prepared for next tax season:

Estimate your business income. This may seem difficult to do if you have no idea where to start, but the best way to figure out how much you will be making for the tax year and how much you should be paying in estimated tax payments is by referring to your tax return from the year before. This will give you an idea on what to expect when filing your tax return and what to pay in taxes.

Organize your expenses. Don’t just leave all your receipts lying around the floor or tossed in the backseat of your car. Consider automating your expenses by using a finance software where you can digitally upload copies of receipts and that synchronizes with your bank accounts so it can view any payments that were made towards your business. This not only saves you time but prevents you from making a mistake when filing your taxes.

Track your mileage. If you’ve been using your vehicle for anything work-related, make sure to track the mileage that you are using. It’s also important to keep a record of any gas, oil, and maintenance expenses that you accrue throughout the tax years.

Take a home office deduction. The IRS created the Simplified Home Office Deduction for taxpayers that own a small business from their home. If you have a qualified home office, you can deduct some of your otherwise nondeductible expenses. Here are some expenses that you can deduct:

  1. Home insurance
  2. Utilities
  3. Rent

Forecast any future expenses in advance. Being self-employed means that it is your responsibility to purchase your own goods and equipment ahead of time in order to avoid any delays that could harm the amount of profit you receive. Forecasting your expenses ahead of time will allow you to understand how much money will need to be allocated to purchase these goods and still have enough left over to not only pay yourself but also your taxes.

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