Income for a freelancer can mean a number of things rather than one thing. Most freelancers get paid a certain amount for the project that was worked on. This is called the gross income or gross receipts. Sometimes freelancers think this is what you’ve earned. You may not realize that your business expenses must be deducted from this number to get your net income or profit. It is this income that gets taxed. Also if you think of your gross income as what you earned, you might well think you have more to spend in your personal life than you do.
Some people who are called freelancers (particularly in the entertainment industry) get paid on a W-2. In thinking about it, these people say that their income is either the gross amount they receive before taxes are taken out or after or what they actually get paid after withholding. For tax purposes, however, they get taxed on the gross amount.
Also income includes the value of something you may have traded for. For instance if you traded a painting that ordinarily would have sold for $2000 for bookshelves and a table, you must include that $2000 into your income. You may also consider deducting the expenses if they are relevant to your business and used in it.
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