Freelance Tax Annoyances
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I’m paranoid about taxes. I’m constantly afraid that I’m going to end up magically owing twice what I think I owe to the point where I save nearly every penny in anticipation of the tax bill. Freelancer taxes are really screwed up, you see. Sure, we get to deduct a lot of things like home office space, but we end up paying double the social security/medicare taxes that the employed pay, because the employer pays half of that usually. And then there’s the state income taxes, and the federal income taxes, which are normal, except we don’t have the luxury of having them withheld for us.
I was not set up this year to pay estimated taxes because I had not intended when I started out to be freelancing for the entire year. I spent half the year looking for a job before finally giving up on that and settling into being a full time freelance designer. I’ve done alright for myself in those last 6 months. But I’m looking at my savings and knowing that a considerable chunk of it is owed in taxes. How much exactly is what I would like to know. I don’t even begin to understand how the tax system truly works.
That’s all a long way of getting around to saying, I file early every year. As soon as I have the paperwork. I almost never fail to have my taxes done by the second week of February. This year, I’m not sure what to do, because of a bunch of 1099 forms from my clients are slow to arrive. Several have not even been sent yet, despite the fact that the government requires that 1099s be mailed no later than January 31st. Now, I have very detailed records of my income thanks to using fantastic invoicing software. I don’t need the 1099s to know what I made. But I think the government expects me to send them in.
Any tax experts out there know what the requirements are regarding 1099s that are so damned slow in arriving? If I report the income myself, does it matter if I don’t send a 1099 that didn’t come in time?
Ugh. It’s enough to give me an ulcer. You know, it’s not like freelancers don’t have enough to worry about. The complete lack of income security is plenty!
Comments
02-07-2010
More often than not the 1099’s I receive are wrong in one way or another, so you’re right to keep your own detailed records. As far as having to file them with your return… honestly, I’ve been e-filing for so long I’m not sure. I never send any of the supporting documentation (w-2’s, 1099’s, etc.), in other words. If and when the companies you worked for do send the forms, they’re required to send one to the IRS as well, so I think as long as your records match theirs you should be OK. That being said, probably best to make sure they do match before sending anything to the IRS. Note that employers are not required to send a 1099 for anything less than $600.
02-07-2010
I always efile as well, and when my husband had 1099s before, the only time we needed to send anything in is when he was the one paying someone else. I would think if you’re efiling, you shouldn’t have to worry about whether they’re all in because you don’t actually send them in.
02-08-2010
As one of the guilty parties and a 1099-MISC recipient myself: I don’t think you need to send the 1099s in — your clients do. You only need to know what they contain, so your records match up to the ones the IRS is getting from your clients.
In the H&R Block e-file service I used today, information from 1099s was used to populate my Schedule C, self-employment income. But the program didn’t spit out a 1099 form for me to send the government (I’m mailing my stuff rather than e-filing) — just a Schedule C.
02-14-2010
You don’t submit 1099s with your return. If you feel your records will match what the clients write on the 1099s then you can feel free to file before you get them. The 1099 comes up if you get audited.
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