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Filing Taxes As Independent Contractor...

 
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Old 07-12-2013, 11:17 AM   #1
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Filing Taxes As Independent Contractor...


This has been my first year working self employed. I searched for an existing thread on this but didn't find any. I do not have an LLC and am working independently, hiring no employees for the most part. Does anyone have advice on how to get started educating myself on how to file this coming April?
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Old 07-12-2013, 01:42 PM   #2
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Re: Filing Taxes As Independent Contractor...


Talk to your accountant/tax preparer as a fist step for advice.

I never met a contractor that was not "independent".

The accountant may give you some info on how to handle any people you occasionally need and maintain your independence and not ruin your ability to get financing to save money and grow.

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Old 07-12-2013, 03:48 PM   #3
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Re: Filing Taxes As Independent Contractor...


I would imagine if you have not incorporated in any way, that you will be filing a Schedule C. I did this for many years before becoming an LLC in 2005. The form is pretty straight forward, and there are instructions on the IRS site. You may also have to file forms for Use of auto, depreciation of equipment, etc. If you do some research, you can file all of this yourself without much of a problem.
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Old 07-12-2013, 05:14 PM   #4
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Re: Filing Taxes As Independent Contractor...


Keep all receipts. You will have deductions against your income ie gas,tools,advertising, rental equipment, home office ....

Get an accountant for your first time. He will give you valuable advice. You should plan on quarterly tax payments or there is a penalty if you pay in April.

Check into the Small Business Association or SCORE. They have information on starting your business in Illinois including classes on taxes,insurance,employees,advertising.

Check in with the Attorney Generals office concerning consumer rights and contractors. There are specific notices you are required to give homeowners when remodeling.

Finally, set aside money for taxes that you don't touch.
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Old 07-13-2013, 01:34 PM   #5
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Re: Filing Taxes As Independent Contractor...


Get a CPA to do your taxes. Their fee is deductible and will keep you out of jail. Mine cost me 300 per year. Figure out a record keeping system that works for you...might be some shoeboxes for receipts or excel file or whatever. I sort all my receipts with Excel then hand the spreadsheet to my CPA...my taxes take about 30 minutes.

Also, have your CPA get you an EIN...gotta have one. If you're paying taxes your first year, you didn't keep track of your expenses well enough.
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Old 07-13-2013, 09:30 PM   #6
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Re: Filing Taxes As Independent Contractor...


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Get a CPA to do your taxes. Their fee is deductible and will keep you out of jail. Mine cost me 300 per year. Figure out a record keeping system that works for you...might be some shoeboxes for receipts or excel file or whatever. I sort all my receipts with Excel then hand the spreadsheet to my CPA...my taxes take about 30 minutes.

Also, have your CPA get you an EIN...gotta have one. If you're paying taxes your first year, you didn't keep track of your expenses well enough.
EIN is not necessary if he is just a DBA. If this all seems overwhelming, rthen by all means get a CPA. I am pretty hands on, do my research and have always done my taxes. Even now as an LLC I still do.
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Old 07-13-2013, 11:00 PM   #7
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Re: Filing Taxes As Independent Contractor...


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EIN is not necessary if he is just a DBA. If this all seems overwhelming, rthen by all means get a CPA. I am pretty hands on, do my research and have always done my taxes. Even now as an LLC I still do.
I'll second that. Done all my own for thirty years. Sometimes CPA's are just too damn honest.

Have you started keeping any kind of books? I mean, besides balancing your check book? If you've made any profit or paid yourself any wages, you're already behind on quarterly estimated tax payments.
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Old 07-14-2013, 11:29 AM   #8
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Re: Filing Taxes As Independent Contractor...


EIN is free to get and reduces your risk to identity theft as it can be used on many irs forms instead of your ssn.
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Old 07-15-2013, 12:13 PM   #9
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Re: Filing Taxes As Independent Contractor...


To answer your question, you will be filing schedule C along with associated forms like form SE.

You really need to sit down with a CPA and let him/her advise you as to what documents and records you need during the year.

If you wish to create an entity such as a corporation, LLC, etc., you need to see an attorney. The attorney will create the entity documents and file with your State. He/she will also guide you through the other necessary steps such as obtaining a federal ID number, etc. The attorney will also advise you as to the pros and cons of the different types of entities. You also need to discuss the matter with your CPA. He/she will discuss the tax implications of each type of entity.

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Old 08-05-2013, 11:28 AM   #10
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Re: Filing Taxes As Independent Contractor...


Talk to an accountant. If you do not have one hire one. And go from there.
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Old 08-05-2013, 02:18 PM   #11
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Re: Filing Taxes As Independent Contractor...


I've filed every year for the last eight years with hr block online and it has gone well.

Don't forget you're going to owe 12% self employment tax. Employees pay 6 and their employer pays the balance. Or you could stop working and have a better life collecting welfare.
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Old 08-05-2013, 02:47 PM   #12
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Re: Filing Taxes As Independent Contractor...


Paying 13% self employment tax plus another 15% or whatever it will end up being... that's a huge chunk of money. In lower income brackets, are there any reductions in that percentage aside from write offs for expenses?
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Old 08-05-2013, 03:02 PM   #13
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Re: Filing Taxes As Independent Contractor...


I agree with the others, you should use an accountant for at least the first couple years. Find one and meet with them soon to help get you set up. They can also advise you on what type of business entity to file for; It's been a while since I looked into it, but I wasn't a fan of becoming a LLC.

If you wanted to start on your own, download a Schedule C form and organize your files in those categories. Also, look into the rules for deducting vehicle expense. You may need to keep more detailed records if you don't use it 100% for business or elect to deduct actual expenses.

EIN (Empolyer Identification Number) Not a big deal, might as well get it now.
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Old 08-05-2013, 03:08 PM   #14
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Re: Filing Taxes As Independent Contractor...


Self employment tax is the social security and medicare contribution (FICA). As an employee you paid half of that and your employer paid the other half. Now that you're self employed you have to pay all of it, which is 15.3%.

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