With a new year underway, we wanted to give you some quick tips and ideas that you should consider as self-employed independent contractors.
- Consider hiring a tax attorney or accountant. They can give you guidance on strategies you should seriously consider — such as forming an LLC or S-Corp, and other tax advantages you should be aware of as a self-employed contractor.
- You may be subject to state tax. ADP lists all the details of state taxes on their website.
- Pay your taxes quarterly. For more information on how to do this, see IRS Form 1040-ES.
- Per diems and stipends count as taxable income.
TurboTax has a lot more detailed information about tax-saving tips for filing your 2017 taxes as a self-employed contractor:
- Expect a 1099 from your agency (LocumTenens.com).
- Open a retirement plan.
- Report self-employment business income and deductions.
- Pay a self-employment tax for Social Security and Medicare, which is figured on Schedule SSE.
- 12.4 percent contributes to Social Security and 2.9 percent contributes to Medicare (See IRS Tax Topic 554: The Self-Employment Tax).
- You can claim half of what you pay in in self-employment tax as an income tax deduction on Form 1040.
- When you are self-employed, the entire burden for paying employment taxes and prepaying estimated income tax liability is left to you. The government wants you to make payments of your estimated taxes throughout the year in quarterly installments. If you don't, you may be subject to underpayment penalties.
- Most self-employed taxpayers may be able to deduct health insurance premiums.
- Eligibility is determined each month.
- The deduction cannot exceed the earned income you collect.
- LLC members can claim the page 1 deduction.
Planning for 2018 taxes:
Updates to the tax law in 2018 have recently been passed into law. To see a comparison of the 2017 vs. 2018 tax law, WealthMD has put together an easy-to-read document for individuals and small businesses. (Disclaimer: LocumTenens.com does not endorse any third-party resource. We merely wish to provide any educational information to our providers.)