Are you an independent contractor in the Glendale, CA area or beyond? If so, you may find preparing your taxes to be a confusing task, especially with the recent amendments the 2018 Tax Reform made to the tax laws for 1099 employees.
Robert Hall & Associates has helped numerous independent contractors in the Glendale area with their tax preparation for over 40 years. Want to learn who qualifies as an Independent Contractor and what tax forms to use? Here’s a brief overview:
Who is an Independent Contractor?
Wondering if you qualify as an independent contractor? An independent contractor differs from an employee in that they self-direct their own business.
Photographers, hairdressers, and tradesmen are a few examples of occupations where independent contractors are common.
Do you do additional work outside your full-time job? You may be considered an independent contractor. The IRS considers you an independent contractor if a business you are not employed by pays you $600 or more for services in a calendar year (even if you hold a separate full-time job with another company).
Tax Forms for Independent Contractor
If you qualify as an independent contractor, there are four main tax forms you must be familiar with in order comply with federal self-employment tax rules:
Form 1099-MISC, Miscellaneous Income
If you were paid $600 or more for services from a company you are not employed by, they will send you a 1099 form at years end. You will report any income you received from your 1099s on your Schedule C (Form 1040).
Schedule C (Form 1040), Profit or Loss From Business
Schedule C reports the total income or loss you incurred as a sole proprietor. Your income will be the sum of the money you received from your 1099 forms.
Schedule SE (Form 1040), Self-Employment Tax
Schedule SE is used to calculate the tax due on net earnings from self-employment. The Social Security Administration uses the information from this form to gage your Social Security benefits.
Form 1040-ES, Estimated Tax for Individuals
While those who are employed have taxes withheld from their paychecks and sent to the IRS, self-employed persons must make quarterly tax payments to make those tax payments.
Form 1040-ES is used to calculate the estimated tax you are required to pay. At the end of the year, if your estimated tax is different from what you actually owe, you will either pay the difference or receive a tax refund.
Why Should an Independent Contractor Hire an Enrolled Agent?
With the multiple tax forms independent contractors have to file, we strongly advise all contractors to work with an enrolled agent like Robert Hall & Associates to make sure they file their taxes right the first time.
Enrolled Agents are the only tax professionals licensed by the IRS. What does that mean for you? Knowledgeable and proficient tax planning, preparation, and representation services when you need them the most.
We’ll not only file your tax return according to state and federal regulations, but we’ll try to maximize your tax return by seeing if you qualify for any benefits afforded to 1099 contractors, like the 20% pass through deduction, that was introduced in the 2018 Tax Reform.
***Are you an independent contractor in the Glendale area or beyond? Call us today at (818) 242-4888 or schedule your free 30-minute consult now. Robert Hall & Associates is a leading 1099 tax preparer and consultant. Our team of enrolled agents can guide you through the self-employed tax filing process and advise you on locating and gathering the documentation you will need.
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