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 large percentage of the workforce are independent contractors, and their taxes are a bit complicated than other employees. Independent contractor taxes are unique as they have a different form and tax credit, different deductions, and the rate also varies with different independent contractors. 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 receive different tax forms as they are taxed differently. These forms include the Schedule-C, the Schedule-SE, a Form-1040-ES and a 1099-MISC form.
As an independent contractor you also get to enjoy the advantage of tax credits. 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. 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. The total deductions work by reducing the total amount of taxable income you are considered to have. 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.
You may find it challenging to file your tax returns when the season comes. This should not worry you as there are multiple options which you can go for and succeed in filing your returns. Seeking the services of a tax professional are the best option of having your returns file successfully and on time. 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.