One of the consequences of working as a freelance after finishing your paralegal online degree is taking care of your own taxes. Unless you have your own accountant, you have to deal with your finances, particularly your tax obligations.
If you’re unfamiliar with what you should pay and you could write off, The Center For Legal Studies said that you may have a real problem. As you fly solo, do the following to file your tax return properly:
Understand What Self-Employment Tax Is
As a freelance paralegal, you’re subject to pay the Self-Employment Tax as a substitute for Medicare and Social Security payroll taxes. In an office setting, there's a split in payment between you and your employer. But since you are your own boss, you have to shoulder the load in full.
This tax 15.3% amounts is composed of a 2.9% Medicare tax on all of your net self-employment income and a 12.4% Social Security tax on the first $118,500 in wages.
Know Your Deductibles
If you need to be aware of how much tax you have to pay, you should likewise know by heart your deductibles. As a self-employed, there’s a variety of deductions you could take, including a portion of the cost of your utilities you use in your home office. If you rent, you can also write a percentage of it off. In addition, the cost of health insurance premium is deductible for the self-employed.
Your education could be considered a tax write-off, too. If you continue to study to become more effective in your work, your educational expenses are potentially deductible.
Learn Keep a Record of Everything
If you don’t have someone to look after freelancing venture’s finances, you should keep careful records of your expenditures. Tax collectors strictly base your tax liabilities and deductions on documents. If you lack proper documentation, you might fail to deduct some expenses you’re eligible to write off.
Tax-savviness is a useful attribute all smart freelance paralegals have in common. As all you got is yourself to watch your back, master your taxation to minimize your expenses and avoid getting into trouble with the government.