Independent contractors are often on their own when they have to do their taxes -- and this can lead to some significant mistakes. If you want to be conscientious about your taxes, the best thing to do is to consult with an accountant before the tax year is over, rather than when you actually need to complete your tax return.
1. Not Booking Their Expenses for Fear of Audit
The idea of an audit is terrifying to most, but many independent contractors are especially frightened of it because their tax return is more complicated than a normal 1040-EZ.
Not being aware of certain tax deductions can really cost you when you file your income tax return. Unfortunately, many taxpayers aren't aware of some of the most common and largest deductions they can make.
If you're itemizing deductions on your tax return, you should be aware of the following seven deductions to minimize your tax liability:
Health insurance premiums- Medical expenses can be very difficult to afford. This is especially true for those with chronic health conditions.
If you provide child care, cleaning services or health care in the home of your employer, it's important to understand the financial relationship you have with that person. Otherwise, you may not only open yourself up to extra taxes but also to risk that you're not even aware of. How so?
Employee or Independent Contractor?
Employers are responsible for paying payroll taxes and providing certain basic rights. But many employers try to skirt the rules and the cost by calling a worker an independent contractor rather than an employee.
During tax season, there are many ways a small business can save some money and make the most of their tax deductions. The easiest way to maximize your deductions is to keep every receipt, because even the smallest amount of money spent can add up to big savings at the end of the year. This article will give you some deductions that are often overlooked by small businesses when it comes to tax deductions.
Even if you cannot get a Social Security number, you may still need or want to file certain tax forms such as the Form 1040. But how can you do so without that vital number?
The answer is by using an ITIN. So, what is that and how do you get one?
What Is an ITIN?
The Individual Taxpayer Identification Number (ITIN) was created by the IRS for certain persons who are unable to get a Social Security number but are still required to file income tax forms.