Greetings! In a simple question and answer example I found from
Auntie Nolo, it seems that independent contractors are considered as
businesses and should file quarterly tax statements:
"...if you are an independent contractor, you are a business. You must
follow the self-employment tax rules -- including filing quarterly
estimated taxes. If your 1099s include your expense reimbursements,
your reporting task will be a tad workier. You must report the entire
amount as income on your tax return, then deduct the amount of the
expense reimbursement as your own business expense on your Schedule C.
This way, your net self-employment income will come out right -- and
you will not have to go into hiding from the IRS every time you hear a
knock on your door."
Not only does filing quarterly satisfy the IRS, it also enables you to
have "money in the bank," as it were, with the IRS as opposed to
having a huge chunk come out at the end of the year. Of course, you
stated that you didn't do this but in beginning your next year of
business, I believe this is a practice you should follow.
On the same site, there is a FAQ for Independent Contractors, a part
of which reads:
"Independent contractors (ICs) are people who are in business for
themselves. Independent contractors earn their livelihoods from their
own independent businesses instead of depending upon an employer to
earn a living. Independent contractors are sometimes called
consultants, freelancers, the self-employed and even entrepreneurs and
business owners."
Another site from the same search is the National Association for the
Self-Employed (NASE). On their site, they offer a list of tax breaks
which you may find helpful and they also advertise a free TaxTalk
feature where you may ask specific questions about being
self-employed. Also, in operating as an independent contractor, you
may find it easier in bookkeeping to hire a personal accountant.
I've also included links below to the IRS and the California tax board
that include articles and guidelines for independent contractors. For
handling your current situation, you may find the answer in the links
I have provided, or you may want to contact a local tax accountant.
I hope this information proves of assistance and if you need any
clarification, please ask.
SEARCH TERM and LINKS:
tax advice for independent contractors [Google search]
://www.google.com/search?hl=en&ie=ISO-8859-1&q=tax+advice+for+independent+contractors
Independent Contractors - NoLo - Law For All
http://www.nolo.com/lawcenter/index.cfm/catID/EC0EEB1C-16EA-4F81-833ED5890B19383A
NoLo "Working as an independent contractor"
http://www.nolo.com/lawcenter/index.cfm/catID/EC0EEB1C-16EA-4F81-833ED5890B19383A/subcatid/0D973BC0-3287-4CA1-944DC75DE82DC59F
Independent Contractor's FAQ
http://www.nolo.com/lawcenter/ency/article.cfm/objectid/4A2EDAAE-21E0-458D-B0099737751F4CA1/catID/0D973BC0-3287-4CA1-944DC75DE82DC59F
Auntie Nolo question and answer
http://www.nolo.com/lawcenter/auntie/questions.cfm/objectID/41E8D996-AF87-4353-84FD30EDD7D08C12/catID/0D973BC0-3287-4CA1-944DC75DE82DC59F
Self-Employed America - Tax Talk "Tax Breaks for Independent
Contractors"
http://www.nase.org/sea_julaug02/taxtalk.asp
IRS [Google search]
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=IRS
IRS
http://www.irs.gov/
independent contractor [IRS site search - top left search box on
mainpage]
http://search.irs.gov/web/query.html?col=irsweb&charset=iso-8859-1&ht=0&qp=-Wct%3AInternal+Revenue+Manual+%28IRM%29&qs=&qc=&pw=100%25&ws=0&la=en&qm=0&st=1&nh=10&lk=1&rf=0&oq=&rq=0&si=0&qt=independent+contractor
California taxes independent contractors [Google search]
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=California+taxes+independent+contractors
Franchise Tax Board - Doing business in California
http://www.taxes.ca.gov/doingbus.html
link to IRS from the California tax site
http://www.irs.gov/businesses/small/display/0,,i1=2&i2=23&genericId=20005,00.html |
