When one works as an independent contractor in Georgia, one is considered to be self-employed. This can complicate tax matters if one is not aware of the responsibilities associated with filing income taxes. Independent contractors file different tax forms when compared to those who are employed by someone else. By being aware of these differences, one can avoid costly and often difficult-to-resolve tax issues that can arise when mistakes are made during the tax filing process.
Taxes for independent contractors
Individual independent contractors are required to report income and deductions on the Schedule C form. One may be able to deduct costs for health insurance, usage of a home office, business-related supplies, mileage, and costs of phone or internet. Receipts for these expenses should be kept along with one’s other tax documents.
Individual independent contractors can pay taxes using the Schedule SE form, which will be filed with the tax return. Since self-employed individuals don’t have an employer to hold back funds to pay taxes throughout the year, that responsibility falls to the individual. One can make quarterly payments throughout the year based on the estimated total annual income. Instead of a W-2, independent contractors will receive a 1099-MISC form that lists how much was made during the year.
Tax advice
Independent contractors face unique challenges when it comes to filing an income tax return. These challenges may come with questions about how best to document one’s business expenses, deductions, and income. Independent contractors who have questions or concerns about tax matters can consult a Georgia attorney familiar with the state’s tax laws.