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As a freelancer, you have the opportunity to be your own employer, but that freedom comes with the responsibility of doing your own taxes. Self-employment income tax filing may appear difficult, but knowing the procedure is vital for your financial success and legal compliance. This complete guide will walk you through everything you need to know about filing taxes as a freelancer, from understanding your tax obligations to maximising deductions and preparing for the future.

Understand The Self-Employment Taxes

Before you jump into filling out the form just by reading about it or learning about the information, you need to have a broader idea of what it is and why it is important for you if you are a freelancer.

What Are Self-Employment Taxes?

Self-employment taxes include Social Security and Medicare taxes for those who work for themselves. As a freelancer, you must pay both the employer and employee portions of these taxes, which can come as a surprise to many new self-employed individuals.

Who Needs To Pay Self-Employment Taxes?

Typically, you need to pay taxes on self-employment if your net earnings from self-employment are 33,403 rupees or more in a year. This is applicable to various types of freelancers, including writers, designers, consultants, and many others.

How Do Self-Employment Taxes Differ From Regular Taxes?

Unlike traditional employees who work under an organisation, freelancers do not have taxes automatically withheld from their paychecks. This means that you are responsible for calculating and paying taxes on your own.
Determine your net profit or loss
In order to calculate this, subtract your business expenses from your business income.
• The current self-employment tax rate


Income tax rates

Till Rs. 3,00,000

No taxes are imposed.

Rs. 3,00,000–Rs. 6,00,000


Rs. 6,00,000–Rs. 900,000

10%+ Rs.15000 on net income

Rs. 9,00,000–Rs. 12,00,000

15%+ Rs 45,000 on net income

Rs. 12,00,000 to Rs. 150,000

20% + Rs. 90,000 on net income

More than 15,00,000

30% + Rs. 150,000 on net income

• The form that you need to fill out
If you are a freelancer, either you need to fill out ITR-3 or ITR-4. You need to fill out the necessary details, such as income, deductions, expenditures, and paid advance taxes.


What Are The Deductions And Credits For Freelancers?

• Home office deduction: If you are a freelancer using a portion of your home exclusively for your freelance business, you may be eligible for the home office deduction. This can be calculated using either the simplified method or the regular method.
• Business expenses: Common expense deductions for freelancers include office supplies, software subscriptions, professional development charges, and business-related travel expenses.
• Health insurance premiums: Freelancers may be able to deduct their health insurance premiums, which include coverage for themselves, their spouses, and dependents.

When Should You Seek Professional Help For Filing Your Taxes?

While several freelancers successfully manage their own taxes, there are certain situations where only seeking professional help can be helpful or sometimes even necessary. Here are some of the key situations indicating that this is the time to consult a tax professional:
• Complex business structure: For instance, if you have formed an LLC or S-corporation, the tax implications become more complex. Then is the time that you must seek help from experts for experienced advice and knowledge.
• Multiple income streams: If you have income from various sources, a professional can help you report everything correctly and optimise your tax situation.
• Audit concerts: This is where a freelancer gets stuck if you lack knowledge. If you are worried about being audited or have been audited in the past, a tax professional can make sure you are filling out all the forms correctly and help you prepare for the worst scenarios in advance.

Remember, hiring a tax professional and their expertise can help you save money in the long run through proper planning, maximising deductions, and avoiding expensive mistakes. If you are desperately in need of an expert to hold your hand and walk you through the legal path, contact our experts, and do not hesitate to ask about the queries. This will offer you a clear picture and help you move forward with the procedure.

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