Key Things That Will Help You Own Tax Season As An Independent Contractor
There are several reasons why some tax seasons are worse than the past ones. The Tax Cuts and Jobs Act left taxpayers confused about the many changes they made to the tax code; this is one of the reasons. The second reason is that a lot of taxpayers who often get and rely on tax refunds did not receive them as they virtually disappeared. There is much more confusion among self-employed individuals. Getting through this tax season as an independent contractor may be of concern to you.
The difference between independent contractors and employees is the big thing that you should know during tax season. What brings about the difference is the arrangement that you have with the clients or companies that you are working with. Although employees and independent contractors may be paid the same amount of money for the same work, there are some differences. Employees do not have control over their time, and they are required to be in the office from nine to five, unlike independent contractors.
Independent contractors have more flexibility and freedom than employees, but they are required to pay their own taxes and health insurance. Independent contractors also pay the same amount of taxes regardless of the cash they have made. You should take all of your deductions possible into account; this is one of the strategies. Having the opportunity of making many more deductions when you are independent is another difference between employees and independent contractors. It is not possible for employees to write off mileage. If you are an independent contractor some of the deductions that you can make are home office deductions and expenses related to your business.
You should also keep impeccable records if you want to own tax season as an independent contractor. The relevant authorities audit a small percentage of taxpayers but you should be prepared in case you are audited, or they want more information. Having evidence of your income and expenses is necessary in case you are asked any questions. You will also need receipts for everything apart from the bank statements. You should keep a mileage book and save the documentation and receipts if you plan on writing off transportation costs or car mileage.
In order for it to be easily tracked and proved, you will want to have a clean record of your income. Not being afraid to ask for help is another strategy that will help you to own tax season as an independent contractor. It is challenging to pay taxes as an in dependent contractor because you may have questions on what to deduct or what not to deduct. Instead of assuming anything, you should ask for help.
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