On March 31, 2014, Small Business Trends has reported a disagreement between two very powerful government agencies, the Internal Revenue Service (IRS) and The Bureau of Labor Statistics (BLS). The issue at hand is whether the levels of self-employed and professional freelancers in American is rising or falling in recent years.
The IRS says that the trend is rising, and the BLS says that the numbers are dropping. Why the vast differences in opinion? The simply answer is “money”. The IRS says that anyone who has earned more than $400 in a fiscal year from freelance work must pay self-employment taxes on that amount.
Meanwhile, the BLS conducts regular surveys of typical households, asking the simple question, “What is your primary source of income?” The key word is “primary”. Most people would answer completely differently depending on which agency is asking the question.
As April 15th draws ever closer, Fiverr sellers are getting ready to do their yearly income taxes in America. And this can be a very challenging time for many professional freelancers. But here are some important tips:
· Don’t forget to deduct all of your yearly business expenses. This can include your laptop, printer, printer paper, Copyscape purchases, your Microsoft Office Suite yearly membership fees, your Internet access charges, and even that office desk that you spend so much working at. If you have a small home office, you can even deduct a portion of your rent or mortgage along with a similar fraction of the electricity and utilities bills.
· Don’t deduct anything if you do not have a saved receipt in hand. The IRS frowns on this.
· Deductible expenses can be classified as either “ordinary” or “necessary”. Ordinary expenses are those that are standard in your particular field of expertise or industry. Necessary expenses are ones that are consider “helpful and appropriate”.
So, even though the IRS is calling more Fiverr Sellers “self-employed”, they do provide some added perks. There is a lot of wiggle room in the options and types of expenses that can be deducted. The great thing about paying taxes for Fiverr sellers? Fiverr is bigger and stronger than ever.
The freelancer site has increased revenues substantially in 2014 while offering millions more gigs, cleaning our old ones, revamping the website, offering mobile apps for both buyers and sellers, and including lots of new additional features and gizmos which make both buying and selling on Fiverr much more easier and substantially more profitable.