Tax implications for part-time freelancer

[tristeve]

Hi all,

Looking for some help with tax issues in the US. I have my regular web developer day job, but also design and maintain web sites in my spare time. I offer a web hosting service too as a reseller for a local company. I don't make a terrific amount of money doing this, and I'm not sure whether I should be estimating my taxes for 2004 now or just wait until next year when I file. Do I submit the earnings as "other income"? Can I offset software purchases and other 'business' items against my earnings? As you can tell I'm fairly new to tax laws in the USA - I recently moved here from the UK. I currently use TurboTax to file my annual return.

Any help would be appreciated,

Thanks,
Steve

[johntabita]

You're doing with I did for the past 4+ years. Unless you're incorporated, the IRS doesn't distinquish between you and your business. So everything you earn, less deductions, is taxable income. As a side business, there's really no reason to file quarterly. Just do it when you have your personal taxes done.

Any business-related cost or expense can be used as a deuction. You can also deduct a portion of your rent and utilities based on the square footage of your workspace. Talk to a tax man about this.

[balinor]

Hi Tristeve, I too did the same thing for years. johntabita is correct, there is no need to do estimated quarterly returns unless you are making a ton of money on the side and don't want to get hammered at tax time all at once. Just file as 'other income' at the end of the year. Be sure to itimize deductions too...there are TONS of things you can deduct if you are using your home for work: mileage on your car for business, advertising expenses, supplies, monthly ISP costs, phone, cell phone, part of your rent, part of your utilities....best bet is to sit down with an accountant for 1/2 hour to make sure you don't cross the line. Good luck!

-Padraic

[tristeve]

That's a great help, thanks so much for the replies! I'll look for a good accountant nearer the time and meanwhile keep filing all my receipts, invoices etc.

Cheers!
Steve