When beginning our professional careers, we may be struck by doubt about which taxes and how many we must pay. Read on to learn more. When jumping into your new job or professional career, it is important to understand your fiscal responsibilities. You should be aware of two aspects: which taxes you should pay and the type of tax receipts (CFDI) you should use.
If you are a salaried employee receiving less than $47,476 annually, you don’t have to worry; your company is obligated to present all your information to the Treasury. Your employer should provide an annual record that you must keep along with your payroll receipts.
If, on the other hand, you make more than the exemption requirement, have more than one source of income, or work for more than one company in the year, you are required to produce your own statement.
All persons making their declaration can make personal deductions for medical expenses, tuition, school transportation, funeral expenses, donations, mortgage loan interests, and complementary contributions to charity. If you are a salaried employee and have personal deductions, inform your employer in writing that you will make your annual return.
In addition to personal expenses, it is possible for people who charge fees (freelance) to deduct any expenses that directly impact your ability to receive income. The obligations of freelancers consist of billing for their services, maintaining accounts, making a monthly statement, and paying in alternative ways any expenses over $100.
It is also essential to know that some movements must be declared appropriately. The most common are prizes, loans, interfamilial donations exceeding $15,000 a year, and inheritances. Failure to comply with this obligation may result in fees or a potential audit. Therefore, informing your employer of your annual return is vital if you are a salaried employee.
What Should you Do?
The first step should be gathering all relevant documents, such as W-2s and mortgage statements. Next, decide between a standard deduction or an itemized one. If you grossed more than $12,400 that year, choosing an itemized deduction is in your best interest. Finally, you must choose your filing status, such as single or joint.
It is important to note that whether you are a salaried employee or a freelancer, you can deduct from taxes the expenses you make on doctors, dentists, medical insurance, tuition, etc. Keep in mind, you can deduct up to 15% of your income or five minimum wages per year.
If you are a freelancer, consider signing up with an Authorized Certification Provider (PAC) to issue your electronic invoices or fee receipts. To deduct these invoices, you must provide proof of payment for services with a card or transfers (not cash) and add this to your annual declaration.
Things 1099 Employees should know
We are in the era of 1099 workers. Whether you go to the office or spend most of your time working from home, being a private contractor can offer freedom from traditional employment.
Did you know:
- You are responsible for paying quarterly income taxes
- You must estimate how much you need to pay every month
- You are responsible for your self-employment tax
- You must develop a bulletproof savings plan
When you begin tracking your income, you will better understand the amount you owe in taxes. You can then use tax software from services such as QuickBooks and estimate your quarterly tax payments. Remember, if the process becomes too overwhelming, you can always hire a tax pro to do the job for you.
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