The Importance of Claiming Freelance Income on Your Taxes

Friday, 22 March 2024, 09:30

Learn about the serious consequences of failing to report freelance income on your taxes, including penalties and potential criminal charges. Understand the IRS reporting requirements and how to avoid tax headaches as a freelancer. Find out why it's crucial to be honest about your income and pay your taxes correctly to avoid legal issues.

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Consequences of Not Reporting Freelance Income on Taxes Revealed

Failing to report income could have serious consequences. There are very few types of income the IRS does not get a piece of. When you earn freelance income, you have to report that income on your taxes and pay the IRS a portion.

Don't assume the IRS won't find out

When you're paid on a freelance basis, it's on you to allocate some of that money for tax purposes. If you're paid $600 or more from a company, it's obligated to issue you a 1099 form. Even if you were paid less than $600, you still have to report that income and pay taxes on it.

How to avoid a tax headache as a freelancer

Make estimated quarterly tax payments on your earnings so you're paying the IRS during the year. Set money aside in case you owe the IRS during tax season. Be honest about your income and figure out a way to pay if need be.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.