What You Need to Know About Taxes as an Independent Contractor.
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. Here is a guide for independent contractors on what they need to know about taxes.
The responsibility of reporting on your income to the IRS is yours if you operate as an independent contractor. 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. The Schedule-C and Schedule-SE, a Form-1040-ES, and a 1099-MISC are the different tax forms which the independent contractors have to fill up.
Tax credits are a great benefit enjoyed by independent contractors. Tax credits will see you retain some of the cash you are supposed to pay in form of taxes to the IRS. With the aid of a professional or tax software, you can never miss out on the tax credits which will see you retain some cash. 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.
If you are an independent contractor, you are also eligible for a wide variety of deductions. Unlike tax credit, the deductions are geared towards reducing the amount of cash that is eligible for the actual taxation. There are many deductions which you can look out for and they include a home office deduction, contributions to retirement accounts, deductions to tuition and fees, expenses related to moving for jobs and also student loan interest paid.
Filing of taxes may pose a challenge to you during the tax filing season. This should not worry you as there are multiple options which you can go for and succeed in filing your returns. If you are looking to have your return filed in time and successfully, consider seeking the services of a tax professional. 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. 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.