A Guide on Taxes for Independent Contractors.
Involvement in any economic activity prompts the payment of taxes, and this is every person’s responsibility. A large percentage of the workforce are independent contractors, and their taxes are a bit complicated than other employees. The uniqueness of independent contractor taxes is prominent in the different tax forms, different tax credit, deductions, and the rates are also varied between different contractors. Below are some guidelines on what you need to know about the taxes as an independent contractor.
As an independent contractor your tax affairs are your responsibility, and you have to report on your income to the IRS. The independent contractor also has to ensure that he or she makes payments for personal deductions such as social security and medical care funds. Independent contractors are taxed differently, and for this reason, they receive different tax forms. These forms include the Schedule-C, the Schedule-SE, a Form-1040-ES and a 1099-MISC form.
Independent contractors are eligible for different tax credits. With tax credits, part of the cash you are to pay to the IRS in form of tax is left with you. You can easily get these tax credits with the aid of the services of a professional or a taxation software. Earned income tax credit, child and dependent care credit, and retirement saving contribution credit are the common tax relief credits you can get as an independent contractor.
There are a number of deductions which you also enjoy if you are an independent contractor. Unlike tax credit, the deductions are geared towards reducing the amount of cash that is eligible for the actual taxation. Some of the deductions which can see you pay a lower amount of cash to the IRS in taxes include home office deduction, contributions to retirement accounts, deductions to tuition and fees, expenses related to moving for jobs and also interests paid on student loans.
Filing of taxes may pose a challenge to you during the tax filing season. You can successfully file your returns without any worries as there are multiple options available for you. If you are looking to have your return filed in time and successfully, consider seeking the services of a tax professional. Engaging a tax pro will see you enjoy convenience and you will never miss out on tax deductions and credit. The IRS tax filing tool can also come in handy if you want to file the returns personally. Physical forms can also be filled out and sent to the IRS via mail as it is an accepted way you can use in filing your returns. Lastly, you can use available tax return filing software to file your returns in time and these info. about thisservice can be found on this page.