For individuals seeking to launch a career in freelancing, or just make a little extra cash on the side, Upwork can be a valuable platform. Whether you are a writer, photographer, or graphic designer, there is plenty of work to be found. However, as you watch your revenues grow on your Upwork dashboard, it is vital that you consider the tax implications of this income. Just as you would pay taxes on any money earned through regular employment, you will need to pay freelancing taxes on your Upwork earnings.
As experienced Atlanta tax accountants, we know how tricky it can be to keep on top of your tax liabilities. With that in mind, we want to ensure that our local freelancers fully understand what these taxes are and how to handle them. As such, we have put together this handy guide.
Upwork Tax Implications
For taxation purposes, the Internal Revenue Service considers Upwork freelancers to be self-employed. In other words, you will need to file your taxes as if you were a business owner. This designation can have both positive and negative effects on your year-end tax return.
On the positive end of the spectrum, filing as a self-employed individual will allow you to deduct certain business expenses. Of course, these deductions will be limited to legitimate expenses derived from your Upwork freelancing efforts. Though the exact nature of the expenses may vary, many freelancers deduct things such as office supplies, education fees, and internet costs. You may even be able to deduct the cost of your home office. If you need assistance determining what you can and cannot deduct, feel free to speak to our helpful team of Atlanta CPAs - we will be more than happy to assist you.
Freelancing taxes are a little different than regular employment income taxes. Most notably, you will usually have to pay a higher marginal tax rate than a W-2 employee. This is largely because you will be expected to pay both the employer and employee portion of your taxes. However, it should be noted that you will only be taxed on your net earnings - after you have deducted your business expenses.
Though handling your Upwork freelancing taxes can be a little daunting for the uninitiated, our team of Atlanta CPAs has the experience needed to minimize your overall tax liability. Our skilled accountants know exactly what deductions you can qualify for, which reports to run, and which documents to file. If you are at all worried about your Upwork tax implications, get in touch with our team today. We are ready and waiting to sit down with you, analyze your finances, and discuss tax solutions that work best for you and your freelancing business.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided in this website is not all inclusive and such information should not be relied upon as being all inclusive.