You don’t want to miss out on something that could reduce your tax liability. While you may not qualify for every deduction, it’s important to at least consider your options. There’s no shortage of deductions for independent contractors. What taxes can independent contractors deduct? Need contractor support-fast? They could be set up to work with you in minutes using Oyster for Contractors. This generally means making quarterly payments throughout the year. You don’t have an employer to withhold taxes and pay on your behalf, so you’re responsible for managing the entire process. Self-employment tax (a combination of Medicare and Social Security taxes)Īs noted above, it’s your responsibility to pay the self-employment tax.What taxes do independent contractors have to pay?īefore we dive into tax deductions as an independent contractor, let’s talk about the types of taxes that you have to pay. You don’t want to make a mistake that could get you in hot water with federal or state tax authorities. Of course, with the IRS watching closely, you must make sure that you only deduct qualified expenses. Doing so reduces your tax liability, thus allowing you to keep more money in your pocket.
In other words, there’s no employer to withhold federal, state, and local taxes.Īlong the same lines, there are expenses you can write off as an independent contractor. One of the things you must understand from the start is that you’re responsible for managing your own taxes. There are various pros and cons of working as an independent contractor.
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