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7 Money-Saving Tax Tips for Freelancers and Remote Workers

By U.S. News & World Report

Paying taxes may not be your favorite part of having your own business or working as a freelancer. It can be a headache to keep up with what you owe and when it needs to be paid. However, the more you understand about taxes, the more you can save by legally cutting your tax bill.

Try these seven tips to take more control over your taxes.

[See: Answers to 7 Burning Tax Questions.]

1. Know which business expenses are deductible. The good news about running a freelance business — or even working as a remote employee — is that you’re allowed to deduct certain expenses from your taxable income, which reduces your tax liability.

Tax-deductible business expenses may include advertising, travel, auto mileage, office furniture, supplies, computers, software or insurance. Even if something is partly personal and partly business, you can still divide it appropriately and deduct the business portion.

Check out ” Publication 535, Business Expenses” or consult with a qualified tax accountant to get familiar with all your potential tax deductions.

[See: 10 Smart Ways to Spend Your Tax Refund.]

2. Claim the home office tax deduction. Claiming a home office deduction is probably easier than you think. It’s a way to make certain expenses, such as mortgage interest, rent, utilities and insurance, partially tax-deductible.

To qualify, you must use a part of your home regularly and exclusively for business, such as a spare bedroom, detached garage or any identifiable space. The Internal Revenue Service also requires that your home is the principal place of your business (but it need not be the only place you work or meet customers).

If you’re employed by a company but working from home, there’s an additional requirement: The business use of your home must be a convenience for your employer, not for you. An example would be if your company doesn’t have a local office or enough space for you to work.

For a full explanation of deductions related to working from home, including a relatively new simplified calculation method, refer to ” Publication 587, Business Use of Your Home.”

3. Be diligent about categorizing business expenses. To get the most tax savings you must keep good records. If you’ve never been a stickler about keeping track of expenses, now’s the time to start.

Try out money management tools, such as Mint, Quicken and QuickBooks. They can help you categorize expenses and stay organized.

4. Have the right kinds of insurance for your work. Choosing the right types of insurance for your small business or home office is essential to protect yourself from unforeseen losses. At a minimum consider these types of policies:

— Property insurance. This pays to repair or replace property, including computers, office equipment and inventory.

— General liability insurance. This insurance pays for damages, legal fees and court costs if your business is found at fault in a lawsuit.

— Commercial auto insurance. This type of insurance pays for damages and liability that may arise when you use a vehicle for your business or freelance work.

And don’t forget about a health plan for you and your dependents. The Affordable Care Act, also known as Obamacare, gives freelancers a marketplace to buy insurance coverage.

Depending on your income and family size, you may be eligible for a subsidy to reduce your premiums.

The cost of various types of insurance — including health, property, liability and commercial auto — are generally tax-deductible when you’re self-employed.

[See: 10 Costs Homeowners Insurance Doesn’t Always Cover.]

5. Use a health savings account. Enrolling in a health savings account, also called an HSA, can save you money on health care costs.

Find out if you qualify for an HSA regardless of whether you’re self-employed or work for an employer. These special accounts allow you to pay for qualified medical expenses on a pre-tax basis, which cuts your tax bill — but you must first be enrolled in a high-deductible health plan.

6. Contribute to a retirement account for the self-employed. Depending on your work and financial situation, you may qualify for different types of retirement accounts. The more you contribute, the more you save on taxes and the bigger your retirement nest egg will be.

Here are three types of retirement accounts you should be familiar with when you work for yourself or don’t have a retirement plan at work.

— Individual Retirement Arrangement. An IRA offers “traditional” tax-deductible contributions that are never taxed until you take a distribution. Or you can choose a Roth version that taxes contributions, but allows tax-free withdrawals in retirement.

— Solo 401(k). This is similar to a 401(k) plan offered by big companies and is available when you work for yourself, with no employees. It’s offered as a traditional or Roth account and comes with high annual contribution limits.

— SEP-IRA. This is a good option for anyone who is self-employed with or without employees. Contributions can only come from an employer. Employees can never contribute their own money. So, as the business owner, you choose the amount of tax-deductible contributions to add to your account each year.

7. Use a tax professional. If you need help understanding how to reduce your taxes, consult with a qualified accountant. While it costs to work with a tax pro, they find ways to save that you may have overlooked, such as streamlining business processes and claiming often-overlooked tax deductions.

More from U.S. News

8 Ways You Can Prepare Now for Next Year’s Taxes

9 Red Flags That Could Trigger a Tax Audit

7 Most-Missed Tax Deductions and Credits

7 Money-Saving Tax Tips for Freelancers and Remote Workers originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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