Taxes on freelance work?

Question

I have a full time job, but I have been doing freelance work on the side. I need to know what I need to do about taxes. I just started doing this and haven't even received my first payment yet. I plan on setting back 50% of what I make from freelancing for taxes. I already way over pay on my full time job. I need to know what form to fill out and do I just file it that same time I do my other taxes?

Answer 1

50% should be enough, and maybe give you a little left over unless you are in a very high bracket or in a state and city with very high state and local income taxes.

You'll fill out a schedule C for your side job income and associated expenses, then a schedule SE to calculate self-employment tax. It does NOT get reported as "other income" - that's for things like lottery winnings that are not subject to social security and medicare, not for income from working.

The numbers from those schedules will transfer to your 1040 along with your income from your full-time job, to calculate your taxes. And yes, the forms and schedules all get filed together.

If you have a state or local income tax, you'll report it there also. How you do that depends on the state.

Answer 2

You need to fill out a Sch C, Sch SE; and, depending on what type of freelance work you do you may need an 8829. Go to IRS/GOV forms and get a Pub 17 to read all about it. If you set up a room in your house as a home office or work area for freelance work you can use the 8820 to write off a portion of your total house expenses. You can also write off directly or depreciate any specialized equipment you need for your freelance work. Don't forget all business miles you cover in doing freelance, too; in 06 it was forty eight and half cents a mile. Get Pub 17 and read up on it; knowledge is power.

Answer 3

You need to keep accurate records and report it under "other income". If you have expenses, you can treat it like a business and take those deductions for travel to and from, supplies, etc. If your are already paying in more than is needed, as you say, there should be no problem reporting the additional income. I doubt you need to hold back 50%.

Answer 4

You attach a Schedule C to your tax return and it is all filed together. You can find one to look at here
http://www.irs.gov

Answer 5

increase your withholding at job

fed tax on self emp--sch. c
ss tax --there is a max.
state tax --add to total income