As the 2023 tax season looms, the Internal Revenue Service (IRS) has released an essential checklist tailored to the unique needs of self-employed individuals, entrepreneurs, freelancers, and small businesses. These six crucial tips aim to streamline tax preparation, ensuring accuracy and efficiency for a seamless filing experience in 2024.
1. Organize Essential Documents for Accuracy
Self-employed individuals, entrepreneurs, freelancers, and small business owners are encouraged to meticulously gather all necessary paperwork and records. This includes Social Security numbers for everyone on the tax return, bank account details, various tax forms (W-2s, 1099s, 1098s), and records of digital asset transactions. Having these documents in order is pivotal for filing complete and accurate tax returns, preventing errors that could slow down tax processing.
2. Report All Income Sources to Maximize Deductions
For those with diverse income sources, including online platform sales, investment income, part-time or seasonal work, self-employment, and services provided through mobile apps, it is crucial to report all types of income on the tax return. This ensures compliance and maximizes the potential for deductions and credits.
3. Opt for Electronic Filing and Direct Deposit for Speedy Refunds
Self-employed individuals, entrepreneurs, freelancers, and small business owners are encouraged to leverage electronic filing with direct deposit. This method is highlighted as the fastest way to receive a tax refund. Tax software can be particularly beneficial for this demographic, guiding users through each section of their tax return and reducing the likelihood of errors.
4. Explore Free Filing Resources and Assistance Programs
The IRS underscores the availability of free resources designed to assist self-employed individuals, entrepreneurs, freelancers, and small businesses in filing their taxes. IRS Free File provides a free online alternative for those with an income of $79,000 or less in 2023. For those with incomes exceeding this threshold, Free File Fillable Forms are available. Additionally, qualified individuals can seek free one-on-one tax preparation help through programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).
5. Choose the Right Filing Option Based on Business Structure
Self-employed individuals, entrepreneurs, freelancers, and small business owners should carefully consider their business structure when deciding how to file. Whether filing personally, using online services, or hiring a tax professional, understanding the nuances of their business structure is crucial. The IRS provides a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to aid in choosing a suitable tax professional.
6. Utilize Online Resources for Quick Assistance
Instead of waiting on hold when contacting the IRS, those in the self-employed, entrepreneurial, freelancing, and small business sectors are urged to use online resources available at IRS.gov. The Interactive Tax Assistant tool and “Let us help you” resources are precious for quick answers to tax questions, refund status checks, and online tax payments – available 24 hours a day.
Stay Informed with IRS Updates
Self-employed individuals, entrepreneurs, freelancers, and small business owners are advised to stay updated on important tax information by following official IRS social media accounts, subscribing to email lists, downloading the IRS2Go mobile app, watching IRS YouTube videos, and engaging with the IRS on various social platforms for the latest updates on tax changes, scam alerts, initiatives, products, and services.
As individuals in the self-employed and entrepreneurial landscape gear up for the 2023 tax season, these six tips from the IRS are tailored to simplify the process, ensuring a smoother and more efficient filing experience in 2024.
Source (IRS News).
