Now that you just perceive a bit extra about how impartial contractor taxes work, let’s get right down to the tactical stuff. 

Right here’s precisely how one can pay impartial contractor taxes.

Step 1: Estimate your quarterly tax legal responsibility

First, you must make an informed guess about how a lot cash you’ll make (and subsequently how a lot cash you’ll owe) in any given quarter.

The IRS recommends utilizing type 1040-ES however you may as well use a quarterly tax calculator to estimate.

Bear in mind, this quantity doesn’t should be good. Should you estimate too excessive or too low one quarter, simply regulate for the following quarter.

Step 2: Make estimated quarterly tax funds

When you’ve estimated your tax legal responsibility as an impartial contractor, you must really make a quarterly tax fee.

You may ship a verify fee together with the aforementioned Kind 1040-ES by mail, or (should you’re not ninety years outdated) you possibly can pay on-line, by telephone, or out of your cell system utilizing the IRS2Go app.

Numerous tax providers like Turbo Tax, HR Block, or your tax preparer even have quarterly choices.

Step 3: Obtain 1099-Misc types from shoppers (if relevant)

As soon as the tax 12 months involves an in depth (Dec. 31 of any given 12 months), any shopper you labored with over the earlier 12 months ought to ship you a 1099-Misc Kind to adjust to IRS requirements.

It’s your shoppers’ job to grasp who will get a 1099 type, but when they’re not used to working with impartial contractors, you might must remind them.

Retailer these types collectively in a protected place because you’ll want them to file your taxes.

Step 4: File Schedule-C at tax time  

Lastly, when the time involves reconcile and report your tax standing to the federal government, you’ll must file a Schedule-C type—an appendage to the normal 1040 types used to report revenue. 

A Schedule-C experiences revenue (or loss) from a sole-proprietorship or different private enterprise. As an impartial contractor, this implies you.

File your taxes as at all times—utilizing a CPA or tax software program—guaranteeing the additional info is accounted for.