There are a variety of types of forms for Americans to fill out their taxes. The 1040 form is one of the most familiar documents, but it's not the only one. At the end of the day the way you file your taxes depends on how you make your income, your assets, and a variety of other financial factors. Independent contractors have to do a great deal more leg work and organization that a traditionally employed individual. Learn more about filing your taxes as an independent contractor, the form that must be used and how your employment status will impact a Denver tax return.
Who are Independent Contractors
Independent contractors are self-employed individuals that provide a service. They may work with others, one-on-one, or for another business or organization. There are a few things that separate independent contractors from a regular employee of a company. To start, the independent contractor works on their own and is responsible for their own supplies to get the job done, from computers to notebooks. Additionally, they are hired through a contract agreement which can be terminated at any time by either party in more flexible manner than at a traditional workplace. At the beginning of the work, the hiring party will supply a W-9 for the independent contractor to fill out. Another difference is that the independent contractor is responsible for their own taxes. When tax season begins, the person or business that hired an independent contractor will supply them with a 1099 for them to complete their taxes.
The W-9 and 1099 Forms
At the beginning of the working relationship, the person or business will provide the independent contractor with a W9. This form is the Request for Taxpayer Identification Number and Certification. It makes it clear that the individual is an independent contractor. According to the IRS’ Forms and Associated Taxes for Independent Contractors
, the taxpayer identification number is typically a person’s social security number. Remember, it is best to keep a W-9 in your records for up to four years in case you are audited. During tax time, the person or business paying for services must distribute a 1099 form to the independent contractor by January 31 to give independent contractors plenty of time to do their taxes.
Impacts to Tax Return
When a person or business pays an independent contractor $600 or more, the independent contractor is required by law to report the income it on their taxes. It is the responsibility of the independent contractor to pay the taxes for the services they were paid to do. As an independent contractor it is wise to save money out of each paycheck to cover the money that will be owed to the IRS. Independent contractors are responsible for paying what is owed by the April 15 deadline. There are opportunities to file an extension if needed. Independent contractors are encouraged to pay taxes on a quarterly basis with payments in April, June, September and January.
With tax season upon is, be sure to read up on preparing to file your 2017 Denver tax return
. For help with the independent contractor status, Bloch, Rothman and Associates is your premier go-to tax specialist. As your local resident expert, we will provide quality service to help you make it through tax time. Contact Bloch, Rothman and Associates
today to set up your free initial consultation.