Now, in addition to your personal income tax deadline of April 15, you’ll also have both federal and state quarterly tax deadlines. If these devices are necessary to complete your work as an independent contractor, you can deduct their cost from your income taxes. Your deduction is proportional to how long you use the devices for work.

Can I Deduct Air Conditioning Units as a Business Expense?

If your state has income tax, you’ll also be required to file and pay your state income taxes. Check with your state to understand when and how to pay state taxes on your income as an independent contractor. As an independent contractor, be prepared for additional tax deadlines.

Credits & Deductions

If so, you might be able to deduct some of the expenses of owning the vehicle from your taxes. You can either take the standard IRS mileage deduction of $0.67 per mile driven or itemize and deduct your actual expenses. This is a great deduction for rideshare drivers or anyone who relies on a car to complete their freelance work. You need to pay estimated taxes quarterly in April, June, September, and January. If you run your business part time, and you’re also someone’s employee, you’ll need to file your own business taxes with Form 1040 (US Individual Income Tax Return). Your employer also files a Form W-2 (Wage and Tax Statement) for you.

Subcontractor Tax Deductions

• However, there are ways you can minimize how much of your self-employment income goes to the IRS.
• However, you might have to pay an additional 0.9% in Medicare taxes if you earn more than $200,000 as a single filer or more than $250,000 if married and filing jointly.
• Help with electronic filing is available to payers, transmitters, and employers, by calling Technical Services Operation (TSO).
• Invoices serve as an official transaction record between two parties, in this case, between independent contractors and their clients.
• A properly completed exemption certificate accepted in good faith protects the seller from liability for the sales tax not collected from the purchaser.
• If you make those payments on time, then you shouldn’t have to worry about a hefty tax bill when you file your federal return.

As a self-employed person, you’re required to pay the entire tax yourself. There are a number of business deductions you can take as an independent contractor, including health insurance, home office deductions, law firm chart of accounts mileage and deductions for your phone bill. This income tax filing will also include whatever deductions you’re claiming. To file by mail, you’ll have to obtain tax forms by ordering them online, then fill them out and submit them to the IRS.

• It’s not out of the question for a contractor to receive a W-9 near the end of the tax year, as their client scrambles to get their taxes done on time.
• For refund inquires please click on the “Refunds” tab on the IRS.gov home page.
• If that’s your situation, it’s important to know which independent contractor taxes you need to pay and how to pay them, so you won’t get a nasty surprise during tax season.
• How does a business determine whether you are an independent contractor or employee?
• The current self-employment tax rate is 12.4% for Social Security and 2.9% for Medicare — a total of 15.3% just in self-employment tax.

Publications

The tax forms that you can report your deductions on will depend on the type of business structure online bookkeeping you use to operate your subcontracting business. The first thing you need to confirm is your status as a subcontractor. This distinction is crucial because it impacts how you handle your taxes.

Home Office Deduction

You’ll pay all these federal taxes together, four times a year when you pay estimated quarterly taxes. The determination can be complex and depends on the facts and circumstances of each case. The determination is based on whether the person for whom the services are performed has the right to control how the worker performs the services. It’s not based merely on how the tax forms for subcontractors worker is paid, how often the worker is paid, or whether the work is part-time or full-time. To avoid incurring withholding tax, the W-8BEN must be submitted to the payer before receiving any income or credits.