Tax upon Free-lance?

Question

i am working full time and paying taxes on my pay checks every year (company that i work for).

This year i started to work as a free-lancer as well. i make websites and get checks from my clients. I heard if my free-lance work is less then 10,000 then i dont have to pay any tax, is that true?

i pay alot of tax from my full time job and my free-lance work this years is around $15000, so should i file for this $15000, or should i let it go (as i am paying tax from my full time job already), is it extremely important to pay my tax on this amount? can i get in big trouble?

BTW i am in NY, USA.

Thanks

I should Add, people who i work for (FreeLancing), they dont have my S.S#, so they are not reporting this to IRS.

Answer 1

You are required to pay tax on your free-lance income, and unfortunately there isn't a 10,000 minimum. The income would be reported on a Schedule C and you'll be required to pay self employment tax. (Can be costly) Another option, looked down upon by the IRS, is to create an S-corp and have your free-lance income flow through it. You could merely pay yourself a reasonable salary and avoid some of the SE tax. You really should discuss that option with your tax adviser. For now just stick to the Sch C and save some money for 4/15 when it comes due. Oh - yeah, don't forget to track your expense, travel, computer equipment, home office, etc. All deductions can help to reduce taxable income. Good luck!

Answer 2

So the freelancing is under the table, as amoral person like you, yes you don't have to report it cause IRS can't find that amount.

Unless you make a $10,000.00 deposit in a bank in one shot. The bank will report anyone making that high deposit.

IRS can also audit the company you freelanced and find you freelancing job on there account by accident. That would result in a audit.

But if you want to pay the tax then do an estimated payment 4 time a year, sound like your freelance work is taking off anyway so start reporting and get use to the quarterly federal and state estimated tax payment.

Estimated tax is base on 100% of last year or 80% of this year tax. That means you take last year tax and divided by 4 quarterly payment and there is your estimated tax, but the rule also state 80% of this years tax, which mean if you won the lottery this year IRS don't want your last year 100% tax, so your last payment due in Jan of next year should reflex close to 80% of this year tax.

Now you have tax withheld for you by your boss, just subtact the est tax payment from the withholding then that is amount you need to make for est tax payment.

Got it?

Answer 3

First of all there is no $10,000 tax free amount. It would be true that you are not required to file if your total income is less than your standard deduction and exemption. In your case you likely exceed that amount with your full time job. Now the good news! Frequently people with small "free-lance" enterprises have enough deductions from that business that they really have a loss which can reduce their taxable income from the full time job. You should see a tax professional as they may just save you more money than they charge.

Answer 4

Income is income....you still have to pay taxes on it, no matter what the amount. I'm not sure how it works, but I think you will have to file a Form 1099 for income earned as an independent contractor. Go to a tax expert and get the straight facts. I'm not sure whether this will apply in your case, but when I worked as an independent contractor, I swear I got taxed at a higher rate than if I had been subject to employer withholding. Yes, it is extremely important to pay any tax owed on this amount and oh, yes, you can get in trouble. The worst trouble, aside from some risk of jail time, is the fines, penalties and interest the IRS charges you on delinquent taxes. You can end up owing more than you earned. Hurry, hurry to that tax expert!!!!!!

Answer 5

Welcome to the cesspool state. Unless you are getting paid cash and keeping you money under your mattress, Washington and Albany will check out your bank accounts if your income is much less than last year. Dont cheat on taxes it aint worth it. On the bright side, you can take all your expenses against that $10,000. Parking, gas, supplies, etc, that are directly related to making that $10,000 is it extremely important to pay my tax on this amount? yes. can i get in big trouble?penalties will run you at least $2500 on $10,000

Answer 6

What you heard is not true, and the people paying may can and probably will submit your name and address to the IRS if they don't have your SSN. What you do is a deductible service for them, so don't think they won't try to deduct it.