Filing Taxes as an Independent Contractor: Easy Tips to Save Money

Being an independent contractor means you work for yourself. You might be a driver, designer, cleaner, writer, or run your own small business. You don’t get a paycheck with taxes already taken out. This means you are in charge of paying your own taxes.

Why It’s Different

When you work for a company as an employee, taxes come out of your pay automatically. As an independent contractor, you get the full payment. But you still owe taxes on that money. You’ll need to set some aside so you can pay when tax time comes.

Keep Track of Your Income and Expenses

Write down all the money you make and all the money you spend for work. You can do this in a notebook, spreadsheet, or a bookkeeping app. Keeping good records makes taxes much easier.

Maximize Your Deductions

Deductions are things you can subtract from your income so you pay less in taxes. Here are some common ones for independent contractors:

• Home office if you work from home

• Supplies like pens, paper, and tools

• Equipment such as a computer or phone

• Travel for work, including gas and parking

• Training like courses or books to improve your skills

Save your receipts. You’ll need them if the IRS asks questions.

Pay Taxes During the Year

You might need to send in “quarterly estimated taxes” four times a year. This keeps you from owing a big amount all at once. We can help if you’re not sure how much to send in.

Helpful Tips

• Open a separate bank account for your business

• Use bookkeeping software to keep records neat

• Save at least 25% of your income for taxes

• Ask a professional for advice if you’re unsure about something

• Don’t forget to track mileage.
  Tip: Use a mileage tracking app for convenience.

Final Thought

Filing taxes as an independent contractor doesn’t have to be scary. Keep good records, know your deductions, and plan ahead. Doing these steps will make tax time a lot easier and help you keep more of your hard-earned money.

If it all gets to be too much to juggle with the day-to-day of your business, give me a call. We can help.