How to File Taxes Being an Independent Contractor
- 1). Make sure you are actually an independent contractor, rather than an employee. Generally speaking, you are an independent contractor if the companies you work for do not control how you do your work and what you do, as well as how you are paid (including business expenses), and who provides supplies used in your work. Whether you have a contract or receive benefits, as well as how crucial your role is to the company, also determines your status as an independent contractor.
- 2). Keep track of all your earnings using a spreadsheet, personal finance software or a ledger, especially if you work for more than one individual or company. This is even more important if you perform work for a business that does not issue you an IRS form 1099-MISC.
- 3). Locate your non-employee income in box 7 on form 1099MISC in the event that you are sent one by someone for whom you did work. Report the income to the IRS using form 1040, schedule C, or schedule C-EZ if you meet certain qualifications.
- 4). Use form 1040, Schedule SE, if your net self-employment earnings meet or exceed $400. Your Medicare and Social Security taxes are figured based on information you provide on this form.
- 5). Find out if you need to pay estimated taxes. Follow the link to IRS Publication 505 at the end of this article to determine the rules for your particular situation.
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