Each new tax season brings more and more scammers with it. This year is no exception. The IRS estimates that tax-refund fraud will hit $21 billion in 2016!
Today IC Tax Advisors received a voicemail (see below) from the “IRS” urging us to call them back before they pursue any legal matter. Keep in mind that if the IRS wants to contact you, they will mail you a letter, not an email or a voicemail. This is just one way scammers try to weasel money out honest taxpayers. Read More
There were two things that drew Brock Andersen into the family business: people and puzzles. “I’m a people person,” he says. “And I love piecing things together until they make sense.” Both his father and older brother are also CPAs, and each family member studied at the same accounting program at Brigham Young University. However, as a champion of freelancer rights at Independent Contractor Tax Advisors, Andersen is forging a path that’s all his own. Read More
If you are an independent contractor with a nomadic lifestyle, the issue of taxes can become murky very quickly. If you are constantly moving from one state to another, do you have to pay taxes to each state? Are you exempt from taxes all together since you aren’t actually considered a resident of anywhere? Read More
When switching from being a W-2 employee to a 1099 contractor, optimizing your tax setup is extremely important. One way to do this is to maximize your deductions. However, a lot of times the costs of running a business start happening long before you have to time to consider your taxes.
So, when exactly can you start deducting your expenses related to your business; e.g., if I open an LLC in July, how far back can I begin deducting home-office or other business expenses? Read More
Independent Contractor Tax Advisors wants to take a moment to remind you of a point that becomes increasingly important as the New Year approaches.
Form an Entity!
For those that have been W-2 employees, but are looking to make the switch to 1099 work, or you who have been working as an independent contractor, but don’t have an entity yet, it’s time to get the show on the road! Read More
As the end of the year draws near, we are left to reflect on the past year and look toward the future. One important aspect of the future is your financial future and there is no better time to prepare than before the New Year starts. Read More
We get lots of questions about the Form W-9. Independent contractors are not always sure if they need it, where to get it from, and who to give it to. Let’s shine some light on this mysterious Form W-9. Read More
It’s nice being an independent contractor isn’t it? You have more freedom to do your job the way you want to, and you often get paid more than if you were a W2 employee! Talk about a win-win. That same freedom and higher pay can get you into trouble if you aren’t staying on top of your tax payments, since you don’t have an employer making those payments for you. Read More
If you’re an independent contractor thinking about taking a gig outside of the US or you’re already overseas and are wondering how your taxes are impacted by your foreign status, this article is for you!
Most taxpayers who earn money in a foreign country are concerned about double taxation. They are concerned that they’ll have to pay taxes to the foreign country as well as to the US. To be clear, this is a very complex area of law that may involve tax treaties, Read More
Operating your business through an LLC with an S corporation election has many advantages. One of the greatest advantages is the ability to shield a portion of your income from self-employment taxes. Whatever you don’t pay yourself through W-2 payroll can be withdrawn from the business as tax-efficient dividends (aka distributions). Like most things, this is easier said than done. One of the biggest hurdles faced by independent contractors to implement the S corporation strategy is implementing payroll correctly. Read More
In the past, we have covered the tax strategies of owning an S corporation verses other entity structures, how to create tax-free income by paying your children, and different strategies to lower your AGI. This post, however, we will be covering one of the lesser-known strategies of owning an S corporation. More specifically, owning an S corporation and adding your spouse to payroll. Read More
Working as an independent contractor provides many tax advantages when things are done properly. Among those advantages is the ability to utilize a far greater number of deductions to reduce your taxes, including the home office deduction.
A while back we posted an article on deductions of independent contractors, you can view it here. For all of you visual creatures, we gathered all of the information together in this neat infographic. Read More
Hiring the right independent contractor can be hard. The benefits to your company are obvious, but what can you do to ensure you are attracting and building loyalty with the right talent? Sure, you can pay your independent contractors more money than their W-2 counterparts, but there’s more you can do to help ensure your 1099 contractors are focused on the work and not on the administrative hassles of owning a business.
A lot of what it is to be an independent contractor is running a business. Most don’t get to go home at the end of the day and leave work behind. No, quite often when they go home and have the other half of their job waiting for them. Read More
Do you hire or staff independent contractors? We have developed a turn-key tax solution uniquely suited to the needs of independent contractors that results in substantially lower taxes and better organization. How does this benefit your company? Simple. Read More
When you earn income that isn’t subject to withholding, you are required to pay estimated taxes. So, if you receive only a salary at a W-2 job, you don’t have to make quarterly estimated tax payments. Whether you have an S corp or your business is a sole proprietorship, most Read More
We posted an article several month ago that explains the difference between operating your business as an S corp VS a sole proprietor (click here to go to the article). Since humans are visual creatures, we put together this short video explainer that will demonstrate the difference between the two business structures. Read More
The best kind of money is tax-free money, there is no doubt about it. Unfortunately, as you probably know, there aren’t many opportunities for you to capitalize on tax-free income. What you probably didn’t realize, is that as an independent contractor, you are able to shift a portion of your income to your children completely tax-free, something regular Read More
Tax planning consists of more than planning to see your CPA at tax time. When the fiscal year-end comes and goes, a lot of tax reducing strategies pass you by, which is why you should be aware of your options well before year’s end.
A big part of tax planning is lowering your taxable income, by increasing your above-the line and itemized deductions. Above-the-line deductions are expenses that the IRS allows taxpayers to subtract from their gross income (before taxes are taken out.) Your adjusted gross income (AGI) is simply your total gross income minus Read More
The June 26th Supreme Court’s same sex ruling changes does a little more for same-sex couples than just allowing them to get married, and one of the first issues that should come to mind is taxes. Before this ruling, couples living in states baring gay marriage would have to file as many as 5 personal tax returns each year! Read More
You may think that a workers status as an employee or an independent contractor is based on what the company and worker decide, but that isn’t the case. At times, companies will classify a worker as an independent contractor even though they treat them as an employee, with the same standards and expectations a regular employee Read More
For most people, the simple truth of why we work is so that one day we won’t have to anymore. That is why it is so important to pick a retirement savings plan that will maximize the amount you can put away, and save you the most taxes in the long run. Read More
You’ve probably been in this situation before: you are offered a new job and while you are negotiating the terms of your employment, you are given the option of working as a 1099 contractor or as a W-2 employee. How do you make the right decision? Read More
For most taxpayers, the thought of being audited can cause them to break into a cold sweat. Should that really be your reaction though? An audit is not something to fear and isn’t nearly as painful as you might believe, as long as you follow the rules. In reality, your chances of being audited are extremely low, with the odds for most people being about 1%. Read More
For those with short attention spans, let me cut to the chase. No, you should not incorporate in Delaware or any other state tax haven, UNLESS it’s the state you live in. For those that want to understand why, keep reading. In this article, we will be using Delaware as the primary state to compare to, but Read More
When determining what type of entity is best for our clients, there are many things that must be taken into consideration. For instance, which state you live in, annual income, and even occupation all effect what structure is best suited to you. Depending on how you fall into those categories, we might recommend a Sole proprietorship, LLC, S corporation, or PLLC. For this article, we will be focusing on the PLLC entity structure. Read More
Income tax can take a bite out of your paycheck, and depending on the state you live in you may have to pay county, city, or even school district income tax. Fourteen states and Washington DC allow counties and cities to impose their own local income taxes in addition to federal and state income tax. Below is a list of those states, with the cities that impose local income taxes wherever possible. Read More
Independent Contractor Tax Advisors doesn’t handle matters of sales tax, but we are often asked by clients “Are my consulting services subject to sales tax?”. It is a good question. Below we have compiled a spreadsheet of all 50 states and DC, indicating whether they impose sales tax on consulting services. The service industry covers a wide spectrum of business’, and because of that, we can’t provide a complete list for every service in every state.
“Keep good records.” You’ve undoubtedly heard it before, but what exactly constitutes good records? Does the IRS require receipts or are your bank statements good enough? Do you need to hang on to the original receipts or can you scan them and keep digital records? We often advise clients on what expenses they can deduct, and how to record them. So in this post we will address these questions and more. Read More
Scamming is alive and well. From a Nigerian prince that needs your help, to identity theft, scamming exists in every facet of our lives. It would come as no surprise then, that scamming is extremely prevalent in taxes. The IRS has identified a number of common tax scams designed to take advantage of tax payers. We will review and advise on how to identify these cons, so you can better protect yourself. Read More
In part one of our discussion on deductions we were able to define a broad definition of what makes an expense tax deductible. It is important to understand what makes an expense deductible because it can vary depending on your facts and circumstances. In part two of our discussion, we will be reviewing general deductions, the criteria that makes specific expenses deductible, and how to deduct them properly. Read More
Working as an Independent contractor, you know saving money is paramount and while being frugal is always smart, sometimes you have to spend money to make money. By properly deducting the expenses that are necessary to keep your business running, you will minimize your tax bill, and maximize the money in your bank account. Read More
At Independent Contractor Tax Advisors, we consult contractors on the various business structures available to them everyday. We often hear, “which business entity is the best for me?” The answer, like many issues involving taxes, is “it depends.” You essentially have four structures to chose from (Sole proprietor, LLC, C Corp, S Corp), and when making your choice, there are three things you need to consider: simplicity, legal protection, and taxes. Read More [wp-svg-icons icon=
If you are an independent contractor or freelancer and are trying to decide between operating as a sole-proprietor or an S corporation, there are about 3 factors you want to consider: simplicity, legal protection, and taxes. If you earn over $30,000 annually, it makes sense in 99% of scenarios to form an LLC, which then ELECTS to be treated as an S corp for tax purposes with the IRS. Read More
We had another successful webinar this week, we were encouraged by the enthusiasm of the attendees! There were so many great questions and we wish there was more time to answer them all! Please reach out to us for 1:1 free consultation for a more in-depth conversation. If you weren’t able to attend this week’s webinar or would like to view it again, here is the webinar recording. Read More
At Independent Contractor Tax Advisors, we frequently receive inquiries from our clients regarding how “per diems” work and whether or not they should use them. The short answer is: we don’t recommend it. Per diems do not mean tax-free money. Continue reading if you want to understand why. Read More
“Independent contractors are virtually everywhere. There are more than 10 million of them across the United States — more than 7 percent of the total workforce. They are essential to our economy, accounting for $473 billion in personal income, or $1 of every $10 earned in the nation.”[i] Read More
We get it, receipts are horrible. They’re a hassle and a safety hazard (ever heard of paper cuts?) No more–give them to us. We recommend that you collect all your receipts each month and send them all at once on the 5th, but you can send more often if you prefer. Read More
When I talk with freelancers and independent contractors about entities and how to structure their businesses, the discussion usually revolves around the tax consequences and how to save money. BUT! There are some big advantages of operating as an S corp (LLC taxed as an S corp) that aren’t related to taxes. Let’s take a look at a few here: Read More
We make a bold statement that my freelancer can beat up your employee and here’s why. Are you treated as an independent contractor (“IC”) by your boss for tax purposes? Did you recently find out that your company is going to treat everyone as an IC? Are you considering freelancing on the side to make some extra money? If so, consider yourself lucky! Read on…
Our market surveys indicate that most people consider being an independent contractor worse than being an employee. Read More
Bookkeeping, or the process of properly recording your business expenses and maintaining support for those expenses is a critical role of ANY business. Unfortunately, most business owners disregard bookkeeping at their peril.
In addition to the obvious requirement to maintain books as a business owner for tax purposes, it can also help you to operate your business more effectively. Properly maintained and timely bookkeeping can help you understand where your money is going. It can help you invest in the right areas, and make tax savings opportunities more obvious. Read More
If you’ve been an independent contractor for a while, you’ve probably been through this before. You are paid a check for your contract work and no taxes are withheld. You are responsible for all taxes and reporting. Maybe you weren’t properly advised or organized and you operated as a sole proprietor. This made sense because it was easy. Read More
Let’s face it, Tax planning as an independent contractor can be challenging. You’re dealing with bookkeeping, payroll, & taxes, which can be confusing and frustrating. At IC Tax Advisors, we understand you, the independent contractor and we are fanatical about saving you money. Here’s how the process works (in a nutshell): Read More
Here at Independent Contractor Tax Advisors, we make a pretty bold claim: over 70% of independent contractors (IC) pay too much in taxes. ‘Where does this come from’ you ask? Click here to see the report from the Small Business Administration (SBA). For most ICs, taxes are their biggest expense, so it’s low hanging fruit. Read More
Believe it or not, your tax preparer is not trying to save you money. He/she may be your best friend, but they are not trying to save you money. Why? They have little incentive to do so, it’s not how they are rewarded and it’s certainly not their business model.
Think about it. Most people visit with their tax preparer maybe once or twice a year. This visit is usually around the end of the year or early in January or February. The purpose of this meeting is to discuss your PRIOR YEAR’S tax return. Does this make any sense? If the year is already done, how are they going to save you money? Shouldn’t they have visited with you to consider opportunities when there was still time to implement them? Read More