How to File Taxes as an Independent Contractor: Tax Forms, Deductions, and Credits for Freelancers Intuit TurboTax Blog

Before we dive into the specifics of how to file taxes as an independent contractor, let’s define 1099s. If you’re going all in on your business and plan to grow your business over time – we strongly recommend creating an LLC. sub contractor tax form An LLC offers personal asset protection while maintaining tax flexibility. Your personal assets are protected from business liabilities, and you can choose how you want to be taxed – as a sole proprietor, partnership, or corporation.

• It’s a far less common deduction, but this part of the tax code allows you to deduct $101,300 of your foreign earned income.
• Key Deadlines to File Form 1099 NEC with the IRS & to the recipient is by January 31st, 2026.
• Employees often have predictable earnings, while most independent contractors have irregular income and additional financial management responsibilities.
• As for paying your taxes, the IRS’s online payment portal gets the job done the quickest.
• As the 2025 tax season approaches, independent contractors must ensure that they file their taxes correctly, particularly by submitting Form 1099.
• Others, like home office deductions, require you to use a formula to write off the right deduction amount.

What Are the Independent Contractor Tax Deadlines?

Sometimes misclassification can lead to serious legal and financial consequences. Misclassifying an employee as an independent contractor or vice versa violates labor laws and tax regulations. At NCH, we are dedicated to helping independent contractors, freelancers, and small business owners navigate the complexities of taxes, entity formation, and asset protection. If you’re looking to form an LLC, reduce your double declining balance depreciation method tax liability, or ensure compliance with federal and state regulations, our team of experts will guide you every step of the way.

Common Deductible Expenses

• You can make the quarterly estimated tax payments once you’ve calculated your potential tax liability.
• Backup withholding is a tax deduction that occurs when independent contractors provide the wrong TIN or incorrectly report their income on a tax return.
• One important aspect to keep in mind is that independent contractors must pay self-employment taxes on their net earnings.
• If you think you’ll owe tax and you also have W-2 income you can choose to adjust your withholdings to cover the overage.
• In turn, they generally don’t receive perks like health insurance or access to retirement savings plans that regular employees have.
• Visit the business structures page to learn more about each type of entity and what forms to file.

It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, the wording “self-employment tax” only refers to Social Security and Medicare taxes and not any other tax (like income tax). Keeping track of how much you make is crucial to filling out your tax forms properly. And having the right software makes all the difference in keeping strong records.

State And Local Taxes

We’ll even let you know whether you need to file an NEC or MISC form for that 1099. The magic happens when our intuitive software and real, human support come together. Book a demo today to see what running your business is like with Bench. Before submitting your 1099, double-check all the information for accuracy. Make sure all names, addresses, and TINs are correct income statement and the amounts entered match your records. Melanie ensures your financial health with precision and expertise.

Make quarterly estimated tax payments throughout the year so you don’t have to pay so much later. It’s essential to understand which 1099 forms apply to your situation. And it’s equally important to ensure you report all income accurately on your tax return. If you’re unsure which forms you need or how to report certain types of income, consider consulting with a tax professional for guidance.

• Here’s what you need to know to pay taxes as an independent contractor and avoid penalties come tax season.
• Maintaining a separate bank account will help you keep business and personal expenses separate.
• Doing so also simplifies audits should the IRS request proof of your records.
• Taxfyle connects you to a licensed CPA or EA who can take time-consuming bookkeeping work off your hands.
• While you’re looking at the numbers, take a moment to review your business coverage, too.
• To put it another way, if you are making money or providing services that do not go via a conventional payroll, you will eventually need a W-9.
• Since taxes aren’t withheld from your earnings, it’s wise to set aside 25% to 30% of your income for taxes.

Beyond Billable Hours: Smart Tax Strategies for Professional Services Businesses

You may also be entitled to tax credits in addition to these deductions. Also, if you operate a cannabis business, your deductions are limited. State of Georgia government websites and email systems use “georgia.gov” or “ga.gov” at the end of the address. Before sharing sensitive or personal information, make sure you’re on an official state website. Details such as these may be outlined in the payment agreement between the employer and the contractor.