![]() ![]() People change jobs and hop careers all the time. You don’t expect to have much - or any - self-employment income next year.The lower your tax liability, the less you’ll pay in underpayment penalties and interest. In this situation, reducing your tax liability by prepaying expenses is a good idea. You owe a sizable tax bill and haven’t made any estimated payments.Here are some scenarios where prepaying could be a beneficial move and help you save money overall: If you’re going to use this strategy, it’s important to look ahead first. This will allow you to claim more deductions in the current tax year - essentially borrowing from next year’s write-offs. Here’s how it works: rather than waiting till January to pay your regularly scheduled bills, pay them in December instead.įor example, if your business rent is due January 5th, pay it December 30th. If you know you’re in for a painful tax bill, this strategy could help. That’s 11 extra months!ĭelaying your income by just a couple of days can give you lots of extra breathing room to plan for taxes. However, a payment you get on January 1st doesn’t have to be reported until April of the following year. Here’s why: A payment you receive on December 31st has to be reported on your tax return by the following April. (Rideshare or delivery drivers, for example, are locked into a relatively inflexible payment schedule.) But for those of you who invoice clients, consider delaying your December invoicing until the New Year. This isn’t a feasible option for everyone. Tip #2: Consider deferring your business income When you’re ready to file, all you have to do is upload your 1099s, and we’ll handle the rest. ![]() The app will find and sort all of your business write-offs automatically. The Keeper app is specifically designed for gig and freelance workers. If you’re wondering where to start with this, you’ve come to the right place.
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