1099 contractors are responsible for their own taxes, not just at the end of the tax year but also quarterly. If you make over $600, then the company that paid you for your services will issue you with a 1099-MISC form indicating the amount of your earnings.
However, even if you don’t receive the 1099-MISC, the IRS is still informed of your earnings. That’s when you need to declare your earnings on your annual income tax return on Schedule C along with all your business earnings and expenses.
As an independent contractor, keeping a record of your earnings and expenses can potentially save you thousands of dollars in taxes. It also provides you with a detailed record that you can use to calculate the tax that you are liable for quarterly.
Unlike being an employee, where the employer deducts tax from your weekly or monthly earnings and pays it over to the Internal Revenue Service (IRS). You are responsible for paying your own taxes every three months on the 15th of the following month.
So, you will calculate your tax liability for the period from 1 January to 31 March and then pay the amount due over to the IRS on or before the 15th of April.
However, if you don’t pay your tax and fall into arrears, then ignoring the problem will only make it worse with the IRS potentially penalizing you by adding another 6% to whatever you owe.
That is where a CPA can assist you in making arrangements with the IRS to pay the liability off and ensure that you pay the minimum tax that you are legally obligated to pay.
It is also an opportunity for you to register an S-Corp and enjoy the many tax advantages that receiving your income via a company will give you.
Introducing Contador America
Moses Nae, CEO of TaxLeaf, Contador Miami, and the founder of Contador America is passionate about helping independent contractors minimize their tax liabilities and never miss a quarterly tax deadline.
As there are many complexities associated with filing taxes as an independent contractor, it pays to consult a professional accountant.
Here’s what one of our successful business owners has to say about the service and support they receive from being partnered with Contador America:
Cesar Buenavista, Doral, Fl
“I am an Account Manager with Contador America and have been working with clients for more than 6 years. The technology they provide is incredible. I have access to everything from my phone if I need it. They are very professional and provide excellent support for me and my employees.”
To help you learn more about how Contador America can assist you with your 1099 taxes or consult on registering a company, stop what you’re doing right now and call us now to secure a FREE 30-Minute Consultation with one of our business experts.