In this guide, we’ll explain everything independent contractors need to know about taxes in 2025, including determining whether the IRS considers you an independent contractor, defining your tax obligations, common deductions you can claim, and how to file taxes as an independent contractor. Let’...
For the 2024 tax year, independent contractors pay 12.4% inSocial Security contributionson the first $168,600 of net income and 2.9% in Medicare taxes on all net income.6Single filers must pay an additional 0.9% Medicare tax on self-employment income that exceeds $125,000 if they are marri...
The article reports of a tax scam which classifies workers as independent contractors instead of permanent employees to avoid payment of salary taxes, evade labor and wage laws, and reduce workers' compensation and benefits coverage, costing states and the federal government in lost tax revenues.Me...
Independent contractors and full-time employees both pay local taxes, state income taxes, and federal income taxes. Tax rates are based on their income. How they’re different. As a full-time employee, you split the cost of Social Security taxes and Medicare taxes with your employer. But as...
Misclassifying independent contractors is a big no-no in the business world. The IRS has strict definitions to determine whether or not a worker is an employee or independent worker. Again, if the worker is an employee, you must withhold and remit certain taxes on their behalf (e.g., F...
Independent contractors differ from traditional employees who’ve gone through a company’s hiring and onboarding process. The company pays its contractors, but contractors aren’t employees. Instead, independent contractors are self-employed (also known as a “business for self”); they can operate...
Find out what is backup withholding, who is subject to it, who is exempt, and what business owners need to do.
Since taxes aren’t withheld from payments, independent contractors must make quarterly estimated tax payments to the IRS. Why? Because the IRS requires taxes to be paid while income is earned. These payments cover both income tax and self-employment tax. The IRS deadlines for these payments are...
Contract wages also trigger taxes for the self-employed. Truck drivers who work as contractors have to pay taxes on self-employment. Truck drivers incur significant business expenses, and the IRS offers several tax deductions for truck drivers for the use of drivers. Most of the company`s tax...
In place of withholding taxes, independent contractors typically pay estimated Social Security, Medicare and income taxes four times a year. Using Form 1040-ES, Estimated Tax for Individuals, compute whether you need to file quarterly and how much you owe. ...