Three Tax-Relief Tips For The Self-Employed
For many, the first months of a new year are the most financially stressful, in part due to this being the heart of tax season. This can be especially tough if you are looking at a higher-than-usual tax bill due to self-employment or a change in circumstances. Fortunately, there are ways to find some tax relief. The following are a few methods you can use to help to find some tax relief.
Tip #1: Catch up on any estimated self-employment taxes
As a self-employed person or independent contractor, you are responsible for making estimated tax payments quarterly throughout the year. It isn't uncommon for someone to miss one of these payments or to underestimate their tax burden, which can result in an underpayment fine. Fortunately, you can make a final estimated tax payment after the new tax year begins. The window this is allowed to occur in can vary each year as the tax code changes, so you will need to check the current deadlines for final payments on the previous year's taxes before attempting to make a payment.
Tip #2: Make a last minute contribution to a retirement account
If your tax burden seems too high, then placing some money in a tax-sheltered account can help lower it. The simplest way for most people to achieve this is to make a last-minute contribution to a tax-deferred retirement account. You can generally make contributions up to the annual limit until the due date for the year's taxes. This is April 15th of the following tax year. Thus, for 2018, you can make contributions to your retirement accounts up until April 15th of 2019.
Tip #3: Maximize your home office deductions
Finally, don't overlook your deductions. You will need to compare the tax savings between itemizing your home office and business expense deductions compared to taking the standardized home office deduction. Just make sure you do take the deduction you are entitled to. All too often, self-employed people avoid claiming their home office because they are afraid that it will increase the chances of an audit. As long as you claim a legitimate home office and office expenses, you have nothing to be concerned about, even if you are ever audited.
Of course, not every method works for everyone, and the methods you choose must be implemented properly so you don't accidentally make a mistake. Contact a tax relief service for the professional help you need.