Tax Tips
Thought to give out tax tips before tax season is upon us again. I do tax preparation in addition to full time jobs to earn extra money. Here are some tips before getting our taxes done. 1. Know the difference between Independent Contractor and Employee. Employees fill out W-4 forms upon being hired to declare how much taxes to take out of their paychecks. They get pay stubs along with their paychecks spelling out the deductions taken out. Employers are required to issue W-2s by Jan 31. Independent contractors don't have taxes taken out of their paychecks and receive 1099-Misc forms if they made over $600, which means they must pay estimated taxes and/or self employment tax if they made over $400 income (meaning Sales minus Expenses equals Income). Independent contractors need to keep records of expenses, business miles driven, and separate car/home office expenses into personal and business uses (insurance, electricity, phone, etc.). Then there is self-employment who usually ...