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Why Freelancers Are Getting Slammed by Taxes This Year
We knew 2018 would be bad — but not this bad
My heart is pounding, my mouth is dry, my gut is churning. I’m staring at a huge tax bill — thousands of dollars. Like, more than $5,000. It’s all the more astonishing because this is not what I’d been expecting.
My husband and I are both freelancers who work at home for clients all over the world. We love our work, and it’s a great lifestyle — except for a few little details. For one, all our income is 1099 income, which means that we are taxed differently here in the U.S. than salaried employees.
This has been true at least as long as we’ve been freelancing, which is the last 10 years for me and nearly all his working life for my husband. We understand 1099 taxation; we know it’s part of the payoff for the flexibility and freedom of our work, of being our own bosses. We make quarterly payments to the IRS with the amount estimated based on our prior year’s taxes so the hit isn’t as bad on tax day itself. We always owe something then, but it’s never a big deal.
This year, however, things turned out very differently.
At the end of 2017, new tax legislation passed that took effect for the 2018 tax year. I’ve read several articles about people who are surprised that their refunds…
