Wednesday, January 30, 2013

Look Ahead, for the Tax Man Cometh

At the end of January and the beginning of February, we get these little notices in the mail from our employers and publishers -- pieces of paper that say, "WE'VE REPORTED THIS INCOME TO THE IRS AND NOW IT'S TIME FOR YOU TO PAY YOUR INCOME TAX."

If you had an employer, they forced you to fill out a form giving them permission to take a bit from your paycheck each time to cover whatever income tax you have.

However, if you are freelancing, nobody did this for you.  YOU NEED TO DO IT, YOURSELF.  Or else you will be hit with a large tax bill by the government.

Martin Lewis talks about this on his blog, Money Saving Expert dot Com.
Don't be confused about that capitol L he places before every mention of money -- that is the symbol for Pounds, the currency in Great Britain.  Just mentally think of it as a dollar sign and everything else will make sense.

One thing he doesn't mention -- in the United States you can pay estimated taxes during the year to cover what you think you will owe, the same as the deductions that employers use.

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