How to Solve Freelance Tax Problems


by Thursday Bram

When something goes wrong with an employee’s taxes, her employer is often responsible when everything is said and done. For freelancers, though, no employer is going to take the time to correct errors. That means that you have to take responsibility for making sure that all of your paperwork is in order and, if it isn’t, that you take the right measures to keep the IRS happy.

Contact the IRS

Staying in touch with the IRS can simplify most of the problems a freelancer can face when it comes to taxes. In most situations, such as late filing, the IRS automatically assumes the worst. In the case of a missing return, for instance, the IRS’ standard policy is to create a substitute tax return based on your expected income. The IRS won’t take time to figure any deductions, though — they’ll just charge you will the full tax obligation for the income they think you’ve earned and charge interest and penalties based on that amount. The only alternative is to contact the IRS if, for any reason, they haven’t received your payments or tax return.

The IRS makes it easy to find information and make contact. You can call and ask tax questions Monday through Friday (freelancers should use the toll-free business help line at 800-829-4933). You can also get face-to-face help at local IRS offices.

Talk to Your Clients

More than a few issues with freelancers’ taxes can be traced back to an incorrect Form 1090. If you can get your client to file an amended form with the IRS quickly, you can simplify the situation. If you do not receive an amended form from your client, even after contacting him via certified mail, the IRS can correct it — but will only do so if you can provide evidence (such as a certified letter) that you have attempted to resolve the matter on your own. Getting your client to amend their paperwork is generally a faster solution.

Know Your Rights

As a tax payer, you always have the right to appeal a problem with the IRS. At every step of the IRS’ process for handling tax problems, you can get help, and if it continues to escalate, there organizations meant specifically to help you. If you can’t handle a matter through the normal IRS channels, the Taxpayer Advocate Service may be able to help you with the situation.


  1. says

    Great points Deb, seeking the help of a professional such as a CPA or an attorney is always encouraged. It is always a good idea to establish a separate bank account for business purposes. This decision will simplify record keeping of income and expenses.


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