A Guide 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 great proportion of workers are independent contractors, and this makes their tax situation quite different from permanent employees. The tax of different contractors is different from other employees in that it has different rates, different forms, different credits and deductions. If you are an independent contractor, here is what you need to know about your 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. These forms include the Schedule-C, the Schedule-SE, a Form-1040-ES and a 1099-MISC form.
Tax credits are a great benefit enjoyed by independent contractors. The tax credit mechanism is geared to relieving you of some tax cash amount you are supposed to remit to the IRS. You can easily get these tax credits with the aid of the services of a professional or a taxation software. There are three common tax credits that are common for independent contractors, and they include earned income tax credit, children and dependent care credit, and retirement savings contribution credit.
If you are an independent contractor, you are also eligible for a wide variety of deductions. Other then the tax credits which give you back your cash through refunds, you can reduce the number of your earnings which can be taxed by the IRS through deductions. Contributions to charity, home office deduction, contributions to retirement accounts, deductions to tuition and fees, expenses related to moving for jobs and also student loan interest paid are some of the deductions which cans see you reduce the amount of cash the IRS can tax you.
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. The best options when you are looking to have your returns filed successfully and in time is 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. Another way you can have the returns filed is by using the mailing system where you fill out physical tax return forms and sending them to the IRS. 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.
Reference: Get the facts