Tax Preparation for Freelance IT Consultants

Overheard in the tech blogosphere highlights how even spammers have to pay taxes. So that means any freelance or on-the-side consulting we tech folks do is taxable, too. But how do you report this income, anyway? How will the government find out I didn’t claim it? I’m not a US citizen so how do I pay taxes? Why does it seem I’m always earning less?

I can’t reflect on your earning power, but I can lead you down the road to transparent income reporting. If you haven’t figured out why you want to come clean with the IRS just consider the 47 month jail term spammer Robert Soloway will be serving in addition to fines and restitution.

But how do you report this income, anyway?

Fortunately the IRS has a guide to finding your Tax Trail.

How will the government find out I didn’t claim it?

1) An individual, like that coworker who seems to hate you, could catch wind of your freelancing and report you to the IRS just for spite. 2) The clients you freelance for could make a mistake when reporting employee earnings by listing you as one of them. HINT: Ask questions about the client’s use of your SSN or ITIN if they request it. 3) I admit I’m not a tax fraud expert. There are plenty of other ways to get caught that I’m not even aware of.

I’m not a US citizen so how do I pay taxes?

Citizenship has nothing to do with paying taxes in the United States. If you work here you pay taxes on your income. In most cases non-citizens are eligible for a Social Security Number or SSN to be used when filing a tax return. Not eligible for a SSN? Non-citizens can get an Individual Taxpayer Identification Number instead.

Take the time to educate yourself on how income tax law affects you. It may not be exciting, but neither is a stack of fines and possible federal prison stay. If this post leaves you with more tax questions consider calling a local Certified Public Accountant or CPA. Most will be happy to answer your questions at no charge.

Please feel free to add your insight and comments about income tax and IT work below.

If you enjoyed this post and want to see further insights on People in IT
please subscribe to the RSS Feed using the link below.