Work at home income is considered taxable income so it should be claimed at tax time. If you earn an income from any source, it shoudn’t be considered tax-free. Take care of your taxes promptly to avoid being audited.
Do WAH Jobs Take Off Tax?
Some companies that pay telecommuters pay them and withdraw applicable employment taxes with you if you work directly for them but the vast majority of companies leave you to deal with your own taxes. Whether or not you get any type of W-9 or T-4, etc at tax time, you are not off the hook.
What does that mean?
It means you need to be organized if you’re making an online income from many sources. Freelance professionals should consider buying tax or accounting software that enables them to track their work invoices and their expenses.
Some work at home professionals submit quarterly reports to their government and some experienced internet professionals hire an accountant. Here are some tips:
Track Your Income and Your Expenses
- Assign a work order # to each client you work with. You might create a system based on a software package or even on a spreadsheet with numbers you’ve assigned.
- Keep all bank statements and note any income that came in through direct deposits, and cheques.
- Keep track of payments received through places like PayPal or Wire transfer companies such as MoneyBookers.
- Keep track of your expenses.
Expenses may be helpful to you at tax time as a self-employed individual so keep track of office supplies and other expenses related to your at home job.