Six Things I Learned That Helped Me Pay Less Taxes As a Freelancer

“Worried about an IRS audit? Avoid what’s called a red flag. That’s something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That’s a red flag.”

— Jay Leno

I’ll never forget that God awful day: April 15th, 2019. I found out that I owed taxes to the Federal Government for the first time in my life.

The bill was approximately $4500. I had always worked traditional jobs that withheld taxes, and I’d freelance a bit on the side. Still, I would always get a refund of several hundred dollars. How did I end up owing so much?

The short answer is, I didn’t know what I was doing. 2018 was the first year that I had made about half of my income from freelancing. All of it was self-employed income with zero taxes taken out. But the very next year, I was able to reduce my tax bill down to $50, and with a bit more planning, I realized I could even end up with a refund in the future.

The following are strategies that I am using to lower my taxable income, while also saving money, and getting stronger financially all-around

1. Contributing to an Individual Retirement Account — Limit: $6000