⏳Tax filing window for 2023 is now open. Last Date: April 16 ⏰
Juggling life being self-employed with a new baby? Let us help. There are a few tax tips you need to know that can help you save money on taxes. Freelancers have to pay income and self-employment taxes, so you should try to use every one of these tips.
Most of these tips directly affect your income tax liability. To lower SE tax, you should write off all ordinary and necessary business expenses in your 1099 job. A freelance tax calculator can help with this.
The first thing you should do when you have a new baby is get a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN). This number will help you claim the baby as a dependent when you file your returns.
Generally, you can apply for an SSN when getting a birth certificate. This is the best way to do it. Otherwise, you’ll have to file a form with the SSA (Social Security Administration), which can get complicated.
If you don’t claim your baby as a dependent on your returns, you can get fined by the IRS. Similarly, failing to pay estimated taxes can also get you penalized.
There are many tax credits new parents can use to lower their taxes. Each credit has its own eligibility rules, so it’s a good idea to ask a CPA for help if this is your first time claiming these credits.
If you usually file as a couple, your filing status will not change once you have a baby. However, if you’re a single parent, you will have to file as head of household. Filing as head of household will give you a bigger tax break when you choose the standard deduction. For 2023, it is $20,800, compared to the $13,850 deduction single filers can claim.
While college may seem very far away, it’s never too early to start saving for your child’s future. The best part? This money is tax-free. You can open a Coverdell Education Savings Account or a 529 Education Savings Plan, even for newborns. And when you do use that money to pay your child’s education expenses, it remains tax-free.
Not all freelancers live off 1099 income. Some of them also have W-2 jobs. Your tax situation changes quite significantly once you have a child, as you have a new dependent to claim. So, you might need to update your tax withholding to reflect your current status. You can do this by talking to your employer and filing Form W-4.To ease the stress of managing your job and your new baby, you can use FlyFin. Expert CPAs can guide you through all the new changes you’re going through and provide unlimited tax filing support. A.I. also finds all your 1099 deductions, so you’re paying as little taxes as possible.
FlyFin CPA Team
With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.