Tips on Taxes For Independent Contractors.
It is every person’s responsibility to pay and file their tax returns if they are involved in any economic activity. A large percentage of the workforce are independent contractors, and their taxes are a bit complicated than other employees. The tax of different contractors is different from other employees in that it has different rates, different forms, different credits and deductions. Here is a guide for independent contractors on what they need to know about taxes.
As an independent contractor your tax affairs are your responsibility, and you have to report on your income to the IRS. The payment of personal deductions such as medical care and also social security payments are the responsibility of the independent contractor. Independent contractors are taxed differently, and for this reason, they receive different tax forms. Some of these different tax forms the independent contractors have to fill include the Form-1040-ES, the 1099-MISC form, Schedule-SE, and the Schedule-C.
As an independent contractor you also get to enjoy the advantage of 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. As an independent contractor, you are eligible for the earned income tax credit, child and dependent care credit, and retirement saving contribution tax credit.
You also enjoy a wide variety of deductions if you are an independent contractor. The total deductions work by reducing the total amount of taxable income you are considered to have. 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. There are multiple options which you can choose during this season and have your taxes in successfully filed. Seeking the services of a tax professional are the best option of having your returns file successfully and on time. Tax professionals are aware of the all the laws pertaining taxes and they can get you high deductions, credits, and they also offer convenience. If you want to file the returns personally, you can use the IRS tax filing tool. You can also fill out physical tax return forms and send them to the IRS through your mailbox. The last technique you can use to fill your returns is through software designed to file the returns.