Your Guide to a No-Sweat Tax Season

Every day you're hustling

There are a lot of benefits to doing contract work for multiple companies (making your own schedule, counting sweats as work attire). An easy breezy tax season is not one of them.

While full-timers file with a single W-2, freelancers need to collect a 1099 from each company that paid them $600 or more. Tip: if you don't get the form from a client by mid-February, send a reminder.

Also different: employers take Social Security and Medicare taxes out of every paycheck. But if you're self-employed, you cover that yourself by paying a 15.3% self-employment tax. So it helps to stay on top of taxes all year round and stash cash away as you earn it. You may want to make estimated tax payments quarterly (April 15, June 17, September 16, and January 15) or risk getting charged penalties for not paying enough or on time.

Bright side

Deductions galore. As a freelancer, you can write off a whole bunch of things: business travel expenses, career-enhancing classes, your computer, even the portion of your housing costs that cover your home office (including part of your mortgage and utilities bills). That means you can reduce your taxable income by all those costs and shrink your tax bill. Cha-ching.

Prepare your self-employed tax status checklist

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. Freelancers should check out H&R Block's Self-Employed Online option. With new tools to maximize your business deductions, it's never been easier to file your taxes online.

In sickness, in health, in joint returns

Just like your nosy relatives, the IRS needs to know your relationship status. Because getting married brings together not just two people, but also their respective incomes. And that can make a big difference with your taxes. For example, if your annual taxable income is $50,000, you're in the 22% tax bracket. But if your spouse makes $150,000, and you file jointly, you jump up to the 24% tax bracket.

Don't freak out: only the portion of income from $168,401 to $200,000 (totaling $31,599) gets taxed at the 24% rate.

Let's get visual. Here's how your joint $200,000 income would be taxed (before factoring in deductions).

In rare cases, merging your finances will raise your taxes. It's lovingly called a "marriage penalty." (Psst... you can file as "married, filing separately," if you reeeeeally don't want to mix your finances with your SO's.) That's why newlyweds and engaged couples may want to work with a tax pro in person to see how filing jointly could affect them. Get expert on-demand help when you file with H&R Block Online or use Tax Pro Go to work with a tax pro remotely.

Mine/yours vs. ours

See whether adding your honey's money to your household income moves you into a new tax bracket.

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. Check out H&R Block's Deluxe Online option, which includes lots of free features like technical support (by chat or phone).

You did it

Keys to your own castle. Or studio apartment. Same thing. Now you get to pay property taxes. How much you have to pay depends on where you live: Hawaii has the lowest effective real-estate tax rate at just 0.27% (aloha) while New Jersey charges the highest rate at 2.44% (fuggedaboutit).

The good news: you're lookin' at a number of potential deductions. You may be able to write off interest paid for your mortgage and your property taxes. But don't forget: for 2019, the standard deduction is $12,200 for single filers and $24,400 for joint filers. So it's only worth it to write off those things if the sum of your deductions are higher than those numbers.

Go green, get green

Working on a home renovation? Think about adding some green details. Things like: solar electric systems, solar hot water heaters, geothermal heat pumps, or wind turbines. Then take advantage of the residential energy tax credit. It gets you 30% back on whatever you spent on those eco-friendly additions. Pro tip: after 2019, the amount you get back for this credit will go down. So if you want to get the most green for going green, get going sooner rather than later.

Home is where the taxes hit

Where you live makes a big difference in how much you'll pay in property taxes. Check out the tax bite on the same property value in Hawaii vs. New Jersey.

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. Check out H&R Block's Deluxe Online option, which includes lots of free features like technical support (by chat or phone).

It's a...(drumroll please)... dependent

Congrats. Ahead: lots of cute baby pics, sleepless nights, and some tax breaks. If you're a full-time employee, update your W-4 and change your allowances ASAP. That could give you a little bump in your next paycheck. Thanks for the raise, baby.

When it's time to file, you can claim a child tax credit of up to $2,000 for each dependent under the age of 17. $1,400 of that credit is refundable. So, if you owe $0 in taxes, and you have one kid, taking this tax credit gets you a $1,400 refund (score), not the full $2,000 (boo). But if you owe more than $2,000, you can subtract the full credit.

Good news

You can get a tax break on child care. If your job offers a dependent-care flexible spending account (FSA), dig in. You can also claim a child-care tax credit. Stay with us. With an FSA, you can save up to $5,000 in pre-tax money to cover child care (i.e. daycare, babysitters, preschool, even day camps) for your dependents under age 13. With the tax credit, you can get back 20% to 35% (depending on your income) on up to $3,000 worth of care costs for one kid or up to $6,000 for multiple kids. The twist: the same expenses can't be used to qualify for both the FSA exclusion and the credit. Aka you can't double dip.

Doing the most
(with childcare tax breaks)

Here's how a family with two kids could take advantage of both an FSA account and the child-care tax credit:

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. Check out H&R Block's Deluxe Online option, which includes lots of free features like technical support (by chat or phone).

Next level

When you power up from Free Agent to Boss status, you can take our freelancer tax tips with you. They still apply. And then take a hard look in the mirror and think about your identity.

Your business identity, that is. Decide if you want to put a ring on it and make your biz official. Aka organizing into a limited liability company (LLC) or another "pass-through business." You may qualify for a deduction of up to 20% of your eligible business or taxable income (whichever is less). But doing it right can be tricky, and you might be better off sticking with your sole proprietor status. (Go ahead and keep that boss attitude, tho.)

Not sure who or what you are anymore? Help is on the way. H&R Block's Tax Pro Go offers expert tax prep without the office visit.

Audit flags

The odds you'll get audited are low (less than 1%). Still scary. Here are some things the IRS might look out for. So if this is you, have your receipts and records handy.

Is it deductible?

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. Check out H&R Block's Tax Pro Go option. It's the easiest way to have an expert do your taxes for you. Just upload your docs and a tax pro will do the rest.

You always remember your first time

First, figure out if you even have to file. In general, if you're single and under the age of 65, you're required to file taxes if you make more than $12,000 a year. If you're self-employed, that minimum drops to just $400. And the rules are different if your parents still claim you as a dependent on their own tax filing.

Still not sure if you have to file? The IRS's Interactive Tax Assistant can help. Just answer a bunch of questions... mostly about your relationship status and income. (Good practice for holidays with family.) And when you're ready to file, H&R Block can hold your hand. Try out their Tax Pro Go, which is the easiest way to have an expert do your taxes for you. Just upload your documents and their pros will handle the rest.

Standard vs. itemized

In 2019, the standard deduction was $12,200 for single filers and $24,400 for joint filers. So add up all of your deductibles and if they're higher than those numbers, you should itemize. If not, take the standard deduction. If you don't itemize, you can still claim a few extra deductions. Some "above-the-line" deductions include traditional IRA contributions, health-savings account contributions, and up to $2,500 in student-loan interest.

No taxation without
preparation checklist

Here's what you should have ready to go when you file.

So, what's the Skimm?

Your tax return is as special as you are. Whether you're a 9-to-5-er, a side-hustler, flying solo, or raising a party of five, your personal situation dictates the size of your tax bill. The one thing all filers have in common: we can all benefit from some professional help. First timers, check out H&R Block's Free Online Edition.