Part two: Freelance jobs and tax qualifications from A to Z
When it comes to freelancing, there can be as many classifications as there are deadlines to juggle. Know which type you are so tax season isn't the hardest project you complete this year.
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Beyond freelance workers and business owners, there are also individuals whose work spans multiple industries or job types.
Take moonlighters. These freelancers typically keep the lights on with a traditional full-time job, but pursue additional passion work. While a full-time employer may cover the majority of your tax responsibilities, the IRS may still consider your freelance work a form of self-employment. Be sure to declare your income earnings, and keep all invoices and receipts to avoid tax penalties.
Related to them are diversified workers. They go big. With traditional and freelance income, these workers may drive for a rideshare company in the morning, serve espresso drinks in the afternoon, and ghostwrite in the evening. Common-law employers may often help cover Social Security and Medicare taxes, but nontraditional jobs like driving for a rideshare service are considered self-employment and may require paying estimated quarterly taxes.
As you review your tax requirements, it’s important to stay on top of your tax filing timeline. This is key to maintaining a healthy cash flow and business model.
Don’t get dizzied by the influx of income and outflow of taxes. Learn more about estimated quarterly taxes and how that impacts your freelance work at wellsfargoworks.com/quarterly-taxes.