• Finance

Use This Checklist to Make Your Freelance Tax Filings Easier

It’s the end of the year—do you know where all of your tax documents and freelance expense receipts are? If not, now is the time to make a plan to prepare for filing your 2022 taxes and to create a seamless and effective record keeping system that makes your 2023 filing even easier.

1.Set the dates for your freelance tax deadlines. To avoid fines, penalties, and last-minute panic it’s key to know when you have tax obligations throughout the year. Here are the federal tax deadlines for 2023 that every tax pro should be aware of. You should also make note of any state or local deadlines you have for estimated or other taxes.

17th – Fourth quarter 2022 estimated tax payments are due
31st – W-2 and 1099-Misc forms due

17th – Personal tax returns are due; first quarter estimated tax payments are due; extensions (if desired) are due.

15th – Second quarter 2023 estimated tax payments are due

15th – Third quarter 2023 estimated tax payments are due

16th – Personal  Income tax returns on extension are due.

2. tax due dates on your calendar, you will be ready to start looking at the documents you need to fulfill the filing requirements. This is where the challenge lies for many freelancers. Keeping track of all of your expenses and the supporting documentation (real receipts, not just a credit card statement) can be challenging. However, there’s a whole army of apps you can use to get the job done efficiently. The most important thing is to ensure that you have a system for consistently collecting and tracking your expenses and the taxes that you pay as the year progresses.

3. Select the right apps to automate your freelance expense tracking. There are many apps out there which can help you track your expenses, deductions, and tax payments. This is a short list of some of the most popular apps that can help you make sure that you have the updated info you need.

Mint can help you track and categorize your spending. If you use Mint regularly, you can collect all of the data you need for tax filing including itemized deduction categories like medical expenses and charitable gifts. You can link Mint to several financial accounts, making it a convenient way to compile a complete picture of your yearly spending. Best of all you can use Mint for free on your iPhone or Android device, as long as you don’t mind a few ads, although there is also a paid premium version which eliminates those.

FileThis is a secure tool that can help you abide by the IRS requirement that you provide actual receipt for any deductions you are claiming for your business. FileThis acts as an electronic filing cabinet where you can upload and categorize bank statements, receipt, and utility bills. You can add up to three years of these items and you can also create bill reminders for tax due to help keep you on track.

Another perk of FileThis? You can send items to other accounts such as Dropbox, Google Drive or Evernote. Like Mint, there is a paid and unpaid version.

MileIQ is a must for tracking mileage that you want to deduct from your freelance taxes.In order to take the mileage deduction, you will need to track where you drove and  when. MileIQ allows you to automate this requirement by sensing when you are driving in a vehicle. The app tracks the route, including start and stop times, destination, and other data required by the IRS for a business mileage deduction. The app is free for up to 40 drives.

Expensify eliminates the need for two apps to track mileage and expenses. It is
especially useful for self-employed freelancers, offering options to send and receive money, submit invoices and receipts to managers and split bills. Custom reporting is available through business accounts. The app is free for up to 25 of Expensify’s SmartScans (photo of a receipt that records all details in the app) per month there are paid plans as well, depending on the number of users and options you choose.

4. Commit to a calendar. Receipts are critical, of course, to substantiate your expenses. However, if you are ever audited, the IRS will also want to see a calendar that aligns with your claimed expenses. This is especially true for any meal or travel expenses. Making sure that you use an electronic calendar is critical and may be easier to use and share than a hard-copy one. There’s an app for Google, Apple, and Microsoft calendars, so pick your calendar and download the appropriate app.

5. Make your freelance tax filing system a real-time resource and an accurate archive of your tax records and potential deductions. The IRS recommends keeping your tax records for at least three years from the date that you filed any specific tax return. This is when having an electronic, cloud-based filing system is much easier than having to keep paper files.
The IRS recommends keeping the following records for at least three years:

  • Wage and earning statements from all employers or payers
  • Interest and dividend statements from bank
  • Other income documents and records of virtual currency transactions
  • Receipts, canceled checks, and other documents that support income, adeduction, or a credit reported on your tax return
  • IRS letters, notices and prior year tax returns
  • The most difficult part of starting a system for tracking your expenses is often setting it up. This checklist is a great starter guide to getting your freelance tax and expense tracking in place. Take an hour before the new year to get organized and download the apps you are going to use so that you can file your freelance taxes more easily and make a fresh for expense tracking in 2023, too.

    Jonathan Medows Jonathan Medows is a NYC-based CPA who specializes in taxes for consultants across the country. His website has a resource section with how-to articles and information for freelancers.

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