💼Freelancers are independent workers who earn on a per job or per task basis.
💰There are two tax classifications for freelancers: pure business income earners and mixed income earners.
🧾Freelancers can choose between the graduated tax rate and the optional income tax rate of 8 percent.
💡Allowed deductions for freelancers include the optional standard deduction and itemized deductions.
💼Freelancers can offer a wide range of services in creative, skilled, or service sectors.
What is the difference between a pure business income earner and a mixed income earner?
—A pure business income earner earns from freelancing full-time, while a mixed income earner freelances as a side hustle.
Can freelancers choose their tax rate?
—Yes, freelancers can choose between the graduated tax rate and the optional income tax rate of 8 percent.
What are the allowed deductions for freelancers?
—Freelancers can take advantage of the optional standard deduction or choose to list their actual incurred expenses as itemized deductions.
What sectors can freelancers work in?
—Freelancers can work in creative sectors like art and video editing, skilled sectors like programming, and service sectors like consulting.
How is the tax on compensation income computed for mixed income earners?
—The tax on compensation income for mixed income earners is computed using the graduated income tax rates.
00:00Freelancers are independent workers who earn on a per job or per task basis.
01:18There are two tax classifications for freelancers: pure business income earners and mixed income earners.
01:43Freelancers can choose between the graduated tax rate and the optional income tax rate of 8 percent.
02:10Allowed deductions for freelancers include the optional standard deduction and itemized deductions.
02:31Freelancers can offer a wide range of services in creative, skilled, or service sectors.
