Tax Tips to Aid You As An Independent Contractor

At times independent contractors have a hard time going through the tax season.  An employee and an independent contractor have a lot of differences and you need to understand them.  Thanks to the IRS the difference is easily understandable.  And this is greatly directed by the existing arrangement that you decide on with your customers or companies that you are working with. Independent contractors and employees might be paid for completing the same job.  Nevertheless, differences exist between them. Click here to find more tips on how to be prepared for tax season.


You find that independent contractors are in total control of their time. They are not restricted in the office for a certain period. They normally work on the schedule that they have set for themselves. They might have more flexibility and freedom compared to employees However, that comes at a price. This freedom comes at the expense of catering for their health insurance and taxes. View here for more info.


The other major difference is that contractors are allowed to take more deductions. Employees have no chance of writing off mileage. Conversely independent contractors have this privilege. In this post, you will know some of the deduction that an independent contractor can use to their benefits. To begin with, there is the home office deduction. Being an independent contractor this is one of the best deduction you can use. However, you need to qualify for it. This is possible by setting aside space in your apartment or home that will serve as your working space.


The other deduction is known as a twenty percent deduction. This is a recent deduction by the Tax Cuts and Jobs Acts. In this case twenty percent of the amount you earned in taken the money you are paid. There is a way that you can use to tell whether you have qualified or not.
It is vital that impeccable records are kept. The IRS normally audits a small taxpayers percentage. Yet when asked for more details you must be well prepared. There will be a need for you to give evidence of your expenses and income upon being questioned. It is vital that you have the relevant receipts to match your bank statements. Receipts are essential in a lot of cases.


You need to keep the receipts for all transactions that you make. For example, you must and should have a mileage book for recording any mileages that you write off or may cost for transportation. Additionally, there is a need to keep the receipts as well as documentation. The same should be carried out for the money that you earn. A clean record is something that you must have. And proving and tracking it should not be difficult.


Find out more about accounting at http://en.wikipedia.org/wiki/Accounting.