The Freelancers Union 2019 tax guide

Mar 06, 2019

With less than six weeks to go until the Monday, April 15 filing deadline, 2019 tax season is well and truly upon us. And while taxes are anxiety-inducing at the best of times, this is no ordinary year.

The major piece of tax reform legislation known as the Tax Cuts and Jobs Act (TCJA) goes into effect this year, and will have significant effects on individuals, businesses, and tax exempt entities. As freelancers operate across all sectors of the workforce, it is therefore crucial to familiarize yourself with these changes, as well as fundamental best filing practices.

To help, we’ve compiled our most indispensable expert advice on all of the above and more in one handy guide. We will continue to update as the deadline approaches, so bookmark, stay calm, and read on.

Filing fundamentals

By now, you should have already marked April 15 on your calendar (good job!). But there are more key tax, saving, and enrollment dates and deadlines to keep track of throughout the year — especially for freelancers. Find them here.

Getting a call from the IRS is scary, but what’s even worse? Getting a call from a scammer who claims to be from the IRS. Here’s how to tell if a contact is legit.

Before diving into how tax reform will affect your 2019 return, read up on this overview of the law. Your situation may change between now and 2025 and remember, there’s a chance that the law might be extended prior to expiration.

Deductions

We have good news, bad news, and more good news! While tax reform increased standard deductions for single, married, and heads of household filers, it also eliminated some popular deductions. Here are some that freelancers will miss, plus an overview of exemptions, deductions, and credits.

Because tax reform eliminated some deductions for employee business expenses, freelancers with W-2s may owe more tax this year. If you receive or issue W-2s, here’s what you need to know.

But all is not lost. You can continue to deduct expenses for business meal expenses that you’ve racked up throughout the year so long as they meet the guidelines (and you kept the receipts). Also, the IRS just lowered the "safe harbor" threshold for the waiver of penalty payments for estimated taxes. Get the details here.

Supplemental income

If you earn extra income through residential or commercial rental real estate, the TCJA’s new rules are a mixed bag. Get to know the pros as well as the cons.

The 20% pass-through deduction allows freelance business owners to net a 20 percent qualified business income deduction if they operate a partnership, S-corporation, or sole proprietorship. Find out if you qualify.

New York distinctions

New York-based freelancers may see some reprieve from tax reform on their state returns this year, as the state has opted not to follow all the provisions of the TCJA. Here’s a summary of how New York and federal deductions differ.

Even if you aren’t based in New York, a 2018 ruling means that you may have to register as a vendor if you sell goods within the state. Find out if you must pay and collect taxes here.

Retirement

Saving for retirement just got slightly easier for freelancers, thanks to some cost-of-living adjustments to dollar limitations for retirement plans. That means you’ll be able to put away more money tax-free. Get an overview of the changes here.

Insurance

While the penalty for not carrying health insurance has been dropped, not having coverage has implications for your financial, as well as physical health. Weigh your options carefully.

Alimony and other legal considerations

Under the TCJA, you can no longer deduct alimony payments or other legal bills including child support and payments to divide marital property. You may also pay more taxes on lawsuit settlements. Here’s how past legal proceedings might affect your return, plus some exceptions.

At a glance

Key dates and numbers for freelancers to know in 2019

Tax reform facts

10 freelancer deductions you won’t see this year

How divorce and other legal proceedings might impact your taxes this year

Do you have a W-2? Note these tax changes

Good news for New Yorkers!

If you sell in New York, you may have to collect and pay taxes

How new IRS rules make saving for retirement easier than ever

Dropping health care coverage? Here’s what it means for your taxes

Supplementing your business with rental income? Know the rules

How to maximize the 20% pass-through deduction

Updated meal and entertainment deduction rules are here

How to know if an IRS contact is legit

Know these tax exemptions, deductions, and credits before you file

Special thanks to Jonathan Medows, whose blog, how-to articles, and comprehensive freelance tax guide are available here.