Being an independent contractor comes with many freedoms. You get to be your own boss, and often times you get to set your own schedule. You can pick and choose when you work and are probably used to being in charge. However, when you are an independent contractor, it all means you take on more responsibility than the average employee. This includes having to stay on top of your taxes. Since you are usually paid in full, without an employer taking tax deductions, it’s up to you to take charge. Today, we are going to take a look at tax help for independent contractors.
It may be nice to get that big paycheck upfront, but remember, not all of it is for you. You’re going to have to save a chunk of those earnings for Uncle Sam. Not saving for taxes can help you accrue a hefty tax debt. By the time your taxes are due, you will find yourself in need of tax relief. Don’t allow yourself to be in this position. Every time you get paid, put aside enough so you have money to pay your estimated taxes. Depending on which tax bracket you fall into, you may be expected to pay taxes quarterly. In 2020, if you qualify for stimulus money during this time of COVID-19, it may be a good idea to sock it away for taxes if you haven’t saved enough thus far.
The Home-Office Deduction
One of the benefits of being a freelance worker is you probably find yourself working from home. Even if the actual work you perform is not done in the home, chances are you are at home while looking for work opportunities. This means you are eligible to take a home-office tax deduction. Be sure to mention this to your accountant.
Keep Meticulous Records
It may not be the most glamorous side of the business, but it is very important to keep meticulous records. This can come in handy if you owe back taxes, or have any tax debts. Your records and receipts will serve to help you make all the deductions you can.
Invest in Financial Software
The easiest way to help yourself keep these records is by investing in financial software. This will not only track your expenses and income but will also provide you with a clear financial picture. Financial software is especially helpful. And yes, you should add your stimulus money in there too.
Reach Out For Help
Being an independent contractor can be a little lonely sometimes. When you need help organizing your taxes, it’s time to call on a professional, Our team at Ideal Tax Solution can help you with everything from tax relief to back taxes. We will get you on a payment plan if you have any tax debt and will prepare and file your taxes so you don’t have to. Your job should be to focus on growing your business and income. Ideal Tax Solution will handle the rest.
The content of this post is not intended to replace the advice of a licensed tax professional. Consult a qualified tax professional for questions specific to your individual circumstances.