The Peck Group, LC - Tax Law
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Common tax mistakes for independent contractors

| Jan 31, 2019 | Uncategorized |

More Americans than ever before have begun to work as independent contractors. In 2018, the Labor Department reported that approximately one out of every 10 workers in the United States qualified as an independent contractor. 

Independent contractors have different tax considerations to make that differ significantly from regular employees. It is easy to make a mistake, especially if this will be your first year filing with this status. To avoid an audit or paying a ton of money in penalty fees, avoid these common tax mistakes. 

Failing to pay estimated taxes

Most employees only need to worry about filing their taxes once a year. However, independent contractors need to pay estimated taxes quarterly. You only need to pay these estimates if you believe you will owe at least $1,000 in taxes to the federal government at the end of the year. The dates you always have to remember include:

  • January 15th
  • April 15th
  • June 15th
  • September 15th

Failing to utilize accounting software

Many people are hesitant to purchase tax filing software because you have to spend even more money filing your taxes. However, it is much more preferable to buy this software than have a run-in with the IRS. Additionally, this software will help you find potential business deductions, so you pay less on your tax forms. 

Not having independent contractor status

Before you begin contract work with anyone, you want a solid agreement in place. This contract will lay out both parties’ responsibilities, and it will help immensely in ensuring you receive payment for any work you do. It also ensures you get your 1099 on time. 

Not paying on time

Although you have your estimated payments to make, you still need to file your tax return before April 15th like anyone else. You do not want to contend with any late payment fees. You should start putting together your tax forms well in advance of the deadline. 

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