Now that you just perceive a bit extra about how impartial contractor taxes work, let’s get all the way down to the tactical stuff.
Right here’s precisely learn how to pay impartial contractor taxes.
Step 1: Estimate your quarterly tax legal responsibility
First, you need to make an informed guess about how a lot cash you’ll make (and subsequently how a lot cash you’ll owe) in any given quarter.
The IRS recommends utilizing kind 1040-ES however you can even use a quarterly tax calculator to estimate.
Keep in mind, this quantity doesn’t need to be excellent. When you estimate too excessive or too low one quarter, simply alter for the subsequent quarter.
Step 2: Make estimated quarterly tax funds
When you’ve estimated your tax legal responsibility as an impartial contractor, you need to really make a quarterly tax fee.
You’ll be able to ship a test fee together with the aforementioned Type 1040-ES by mail, or (in the event you’re not ninety years previous) you possibly can pay on-line, by telephone, or out of your cellular gadget utilizing the IRS2Go app.
Plenty of tax providers like Turbo Tax, HR Block, or your tax preparer even have quarterly choices.
Step 3: Obtain 1099-Misc types from shoppers (if relevant)
As soon as the tax 12 months involves a detailed (Dec. 31 of any given 12 months), any consumer you labored with over the earlier 12 months ought to ship you a 1099-Misc Type to adjust to IRS requirements.
It’s your shoppers’ job to grasp who will get a 1099 kind, but when they’re not used to working with impartial contractors, chances are you’ll have to remind them.
Retailer these types collectively in a protected place because you’ll want them to file your taxes.
Step 4: File Schedule-C at tax time
Lastly, when the time involves reconcile and report your tax standing to the federal government, you’ll have to file a Schedule-C kind—an appendage to the standard 1040 types used to report revenue.
A Schedule-C reviews revenue (or loss) from a sole-proprietorship or different private enterprise. As an impartial contractor, this implies you.
File your taxes as all the time—utilizing a CPA or tax software program—guaranteeing the additional info is accounted for.