Forum Moderators: phranque
If you have any answers please share. Thx.
Other than that, consultant an accountant or a tax attorney for specific advice.
An accountant might be worth your trouble but it's also not tough to do on your own. And, in fact, by outsourcing, you will miss a very valuable learning opportunity for your economic future - your accountant can tell you what to deduct after you have spent it but this is a way to get a good feel for what will help you keep good records and to plan accordingly. Then you can discuss gray areas or any confusion with an accountant.
Just follow the instructions for a self-employed individual. You need to file a Schedule C. I hope you have kept records of all expenses.
Also, you are supposed to file quarterly filings with your estimated taxes. If you haven't, well, that could be a slight problem. Nothing criminal, necessarily, but you might have a large unwanted tax bill and possibly late fees. The idea is that you need to send in quarterly estimates of your income taxes PLUS your Social Security/Medicare withholding.
You might also want to file an 8812 (or whatever the number is) that deals with business use of the home. Be sure to read about how this increases your risk of audit, as well as your need to keep good records and a segregated work space.
And no, I am neither an accountant nor an attorney so I'll give the usual disclaimer that this does not constitute sound legal or accounting advice.
Forget about an attorney! Seriously. That is advice that only a lawyer can give.
My attorney has been very helpful doing my taxes. She has quite a few years of experience and some good advice to offer.
But, anthonyon, diamondgrl's advice is good. You have income as a self employed person, not unlike income from any other work you do that is not a part of a regular job (with withholding). Get a good tax book, read the material from the IRS, and fill out the forms. You will have to pay "self employement" tax (the part of social security the employer normally pays) and you might have to pay estimated taxes 4 times a year.
You can consult with a tax professional (attorney or accountant) for advice and to make sure you aren't forgetting anything, but you should be very much involved so you will learn about the process.
This does bring up the related topic of organization. My guess is that you are a sole proprietor. This is a simple form of ownership, where your net income before tax is taxed at your marginal tax rate. This is usually lower than a corporate rate, but it does expose your personal assets to liability judgments. You might want to investigate forming an LLC, which enables you to protect your personal assets (like a corporation) but allows your profit before tax to be taxed at your marginal individual rate.
There are a lot of web resources on this topic, and a good tax pro can provide the ins and outs. In most states the cost to form an LLC is well under $1000, although YMMV.
