Benefits of Using a Tax Filing Service
Being self-employed means you sometimes wear multiple hats. You can be the boss, the accountant, and at tax-time, you can be your own tax preparer.
Sound daunting? It doesn’t have to be. Online tax filing programs designed for self-employment can help you easily manage your business and personal taxes without requiring you to study the ins and outs of tax rules.
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Filing Taxes Online vs. In-Person Tax Prep
You have options for filing your taxes. You can go to a tax office and work with a tax professional, file your return online with a DIY-product, or go the old-fashioned route by completing paper forms. The last method is rarely used anymore, so let’s toss that one aside. Below, I’ve outlined a few advantages of filing your taxes online vs. in-person.
Complete your taxes on your own schedule: Your time is valuable. When you’re taking care of your business, your schedule can be hectic and your day full. By filing your taxes online versus in-person with a tax professional, you can complete your return when it works best for you. Of course, you don’t have to complete your filing in one session with online products. You can start the process, take a break, and come back to it later if needed.
Gain insight to your business finances: Completing your return with an online program means you can see the impact various credits and deductions can have on your taxes without having to know the technical background or do the calculations. Getting this insight can help you build awareness of the tax benefits that can improve your bottom line in the future.
Save on tax prep costs: By filing self-employed taxes online, you can save money. Filing in-person with a tax professional is more expensive. If your self-employment income is from a side gig, you might be looking for accurate, yet more affordable tax preparation. In this case, it may be better to file your own taxes online and save a bit of money instead of paying for a tax professional.
What You Can Expect When Filing Self-Employed Taxes Online
Being self-employed means you have a different source of income and different tax forms to complete compared to a worker with only traditional W-2 income. Below are a few features you will find with most online filing programs designed for self-employed taxes.
Reporting self-employment income: Whether you’re a freelancer, small business owner, or even someone who drives for a company like Uber or Lyft, you’ll need to report your business income and expenses using Schedule C and Schedule SE. If you’re an independent contractor, the company you work for will report your income on Form 1099-NEC or Form 1099-K.
Calculating self-employment taxes: When you work as a W-2 employee, the employer withholds part of your pay for Social Security and Medicare taxes. As a 1099 worker, you’ll need to account for these taxes on your own and report them on a Schedule-SE.
Maximizing business tax credits and deductions: When you work for yourself, you can receive certain credits and take tax deductions related to your business activities. Most online filing software you can choose from to file your taxes will include these types of deductions and help you calculate things like the depreciation of any property, such as vehicles or any other equipment, you may use for your business.