This is a sponsored post written by me on behalf of Money Under 30 for TurboTax.
Americans are working for themselves in increasing numbers. Even before the pandemic drove many to work from home, 28.2% of Americans (according to Forbes) reported earning self-employment income at least part of the time.
For those 44 million Americans, tax time can get a little tricky. Unlike salaried employees, independent contractors don’t get a W-2 form that covers all their earnings for the year. You may have a stack of 1099 forms, sent to you by the various clients you worked with throughout the year. Or you may need to report sales figures for a small business.
In recent years, it’s become easier than ever for independent contractors to handle taxes on their own. Using tax preparation software, taxpayers just answer a series of questions, and the forms are automatically filled in. But claiming self-employment income often brings questions that sometimes require the help and advice of a tax expert.
That’s where TurboTax Live Self-Employed comes in. This brand-new solution gives you access to a live tax expert, ready to give you as much or as little help as you need. Here’s what you need to know about this new product offering.
You’ll get help reducing your taxable income
If you have an employer, you currently pay 6.2% of your taxable income toward Social Security tax, along with another 1.45% in Medicare taxes. Your employer matches that amount.
Once your self-employment income reaches $400 though, the full amount is on you. This is called self-employment tax, and it’s currently 15.3%. That’s $12.4% toward Social Security and 2.9% for Medicare, which will come out of your net self-employment earnings.
But there’s good news for self-employed individuals. You can claim deductions. Everything from mileage to research materials to the cost of your home office can be deducted if you’re self-employed. But knowing exactly what you can and can’t claim is the next big challenge.
TurboTax Live Self-Employed walks you, step-by-step, through the process, helping you find deductions you might have missed. Any questions? No problem. You can chat live with a tax expert and get the answers you need.
You’ll be able to maximize your refund
Once you’re self-employed, that annual refund may become a little less certain. Some years, you’re simply hoping to avoid a hefty tax bill. TurboTax Live Self-Employed will search for deductions you might have missed that will help you get closer to that refund.
Owe a little too much this year? After filing with TurboTax Self-Employed, you can get an accurate estimate of what to expect on your next year’s return, so you can avoid any surprises and be better prepared for the future and your quarterly estimated tax payments. To help make sure you’re on track throughout the year, you can track your earnings and expenses using QuickBooks Self-Employed for seamless integration.
You’ll have access to advanced expense reporting
Self-employed taxpayers can expense large purchases like office equipment and, in some cases, vehicles. But deducting this type of asset isn’t as straightforward as reporting that office chair you purchased. For larger assets, you’re usually better off depreciating rather than taking the full amount in the year you bought it.
But depreciation can get a little complicated. That’s where TurboTax can help. Instead of having to go through pages of frustrating tax tables, just answer a few simple questions and let TurboTax Live Self-Employed recommend the depreciation schedule that will reduce your taxable income the most.
You can import from QuickBooks Self-Employed
For self-employed professionals, one of the biggest challenges at tax time is tallying income and expenses. You can make the process easier next year by using QuickBooks Self-Employed. All you’ll need to do is log your expenses throughout the year and at tax time, import the information into TurboTax. Everything will be separated using the IRS’s expense categories.
Use QuickBooks’ invoicing feature and your earnings will be tracked, too. At tax time, import the information into TurboTax and compare what you actually earned with what your 1099-NEC forms are reporting. Clients are only required to send a 1099-NEC if they paid you $600 or more, but you’re still required to report every dime you earned. This feature makes it easy to make sure you aren’t accidentally underreporting your income.
You’ll get the benefit of customized assessments
One-on-one chat help is only one way your TurboTax Live Self-Employed experience will be personalized. You’ll also see deduction options specific to your industry. If you sell real estate, you may see recommendations for marketing and mileage, while rideshare drivers could see deductions like vehicle expenses and cell phone service.
Once you’ve completed your tax return, TurboTax Live Self-Employed will give you a personalized audit assessment, calling out red flags that could lead to an audit.
If you’re a new business owner, you’ll get personalized guidance
If it’s your first year as a self-employed professional, a TurboTax Live tax expert can give you one-on-one guidance on how to set things up. In subsequent years, your information will automatically be transferred from your last year’s return to save you time.
New businesses have special start-up expenses that can make a big difference during that first year. As a newly self-employed professional, you’ll answer questions that will help identify the start-up expenditures that you may be able to deduct, in addition to any other deductions you may have.
You can easily upload documents
Self-employment income typically means stacks of documents. TurboTax Live Self-Employed makes this part of the process easy. Whether you have one 1099-NEC or 20 of them, you can use TurboTax’s “Snap and Autofill” feature to upload them easily.
To use this feature, you’ll just need to download the TurboTax app on your smartphone and use it to take a picture of the form. The app will automatically import all your information and put it into all the right places, so you won’t have to enter it manually.
You’ll receive a final audit assessment
Many errors can be avoided by simply doing a final once-over before you send your return off to the IRS. With TurboTax Live Self-Employed, you can have a tax expert do a final review before you file, so you can be confident everything’s done right.
TurboTax stands behind its service with its 100% Accurate Expert Approved Guarantee. In the event you’re ever audited for a tax year when you file with TurboTax, you’ll get free step-by-step audit guidance from a TurboTax expert. If you pay an IRS or state penalty (or interest) because of an error that a TurboTax Tax Expert or Tax Attorney made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, they will pay you the penalty and interest.
You can easily claim travel expenses
Sometimes self-employment requires hitting the road. TurboTax Live Self-Employed will help you claim all those expenses, including your vehicle mileage. If you use QuickBooks, there’s even a mobile app that will automatically track your mileage for you.
Get help paying employees
Whether you’re a sole proprietor or starting a small business, you may end up paying other people to do work for you. This could be work you outsource to an independent contractor or an employee you pay hourly or on salary.
When it’s tax time, TurboTax Live Self-Employed will help you create and submit all the W-2 and 1099 forms you need. These payroll expenses will also be inputted into the appropriate section of your tax forms.
Rental property owners and investors get help as well
If you own real estate, TurboTax Live Self-Employed has specialized help for your business. You’ll get step-by-step assistance with getting your properties onto your tax forms, as well as access to information regarding the fair market value of renting those properties.
Investors can easily import investment info. TurboTax can automatically import investment tax forms and support up to 1500 transactions from over 300 participating financial institutions and investment platforms. Further, tax experts are available year round to provide unlimited guidance and advice on different investment tax scenarios with TurboTax Live.
You’ll get year-round help
Self-employed professionals don’t stop thinking about taxes once the tax deadline has come and gone. TurboTax Live tax experts are available all year round to answer all your questions and give you unlimited, on-demand tax advice unique to your self-employed situation.
With TurboTax Live Self-Employed, you get the ease and convenience of using an online tax preparation service with the expertise and confidence of working with a tax expert.
If you prefer to hand off your taxes completely, you can have a dedicated tax expert do your taxes for you from start to finish using TurboTax Live Full Service. Whatever option you choose, TurboTax Live Self-Employed is available online to start for free. You only pay when you file.