Home Financial Literacy Tax Basics for Freelancers and Entrepreneurs: What’s Important to Know

Tax Basics for Freelancers and Entrepreneurs: What’s Important to Know

by Branson Purdy

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3. Understanding Deductions and Credits
Deductions and credits can help reduce your taxable income and the amount of tax you owe:

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Tax Exemptions, Deductions, and Credits Explained
Deductions: Common deductions for freelancers and entrepreneurs include home office expenses, mileage, professional fees, and health insurance premiums.

Credits: Tax credits directly reduce the amount of tax you owe. Examples include the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit.

4. Filing Your Taxes
Here’s how to prepare and file your tax return:

What You Need to Know Before Filing Your Taxes
Tax Forms: Most freelancers and entrepreneurs will use Form 1040 and Schedule C to report income and expenses.

Quarterly Payments: Use Form 1040-ES to calculate and pay estimated taxes each quarter.

Deadlines: The deadline to file your annual tax return is typically April 15th. Extensions are available, but any taxes owed are due by the original deadline.

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