Taxes for free lancer
Hi Terry—
As of January 15, I began freelancing about 5–10 hours per week. I’m trying to determine the best and safest way to handle taxes.
Is it better to:
• File estimated taxes quarterly as an individual, or
• Increase tax withholdings from my husband’s paycheck (approximately $350 per month)?
We file jointly, and I’m also interested in making sure we can fully benefit from any tax advantages related to running a home-based business.
Terry Says
Bottom line is that you could do either, as long as you’re filing a joint return and your tax obligations are covered.
BUT, there are more sensible things to consider. You should immediately open a tax-deductible IRA at Fidelity or Vanguard and start saving on a regular basis. That will reduce the amount of taxes you owe.
And for the first year, even if you don’t file quarterly, you’re safe if your withholdings are 100% of last year’s taxes due or 90% of what will be due for this year.
With only a few hours of freelance work a week, this first year shouldn’t be aproblem — especially if you open the IRA. Unless you have a very high hourly fee!!!
Then you can see what you need to do for next year.
