{"id":196760,"date":"2020-04-14T07:00:13","date_gmt":"2020-04-14T11:00:13","guid":{"rendered":"https:\/\/www.virtualvocations.com\/blog\/?p=196760"},"modified":"2024-05-02T15:09:44","modified_gmt":"2024-05-02T19:09:44","slug":"beginners-guide-to-taxes-as-a-contractor","status":"publish","type":"post","link":"https:\/\/www.virtualvocations.com\/blog\/telecommuting-survival\/beginners-guide-to-taxes-as-a-contractor\/","title":{"rendered":"Beginner’s Guide to Taxes as a Contractor"},"content":{"rendered":"\n

Updated May 2024<\/em><\/strong><\/p>\n\n\n\n

So you\u2019ve made the leap from employee to an independent contractor. Along with this exciting career move comes the opportunity to work on new projects, set your own hours, and become your own boss. But one terrifying aspect awaits: taxes.<\/span> Just the mention of these two syllables can leave many beginner contractors panicking. But with a bit of planning and some handy tips, you can turn the struggle of taxes as a contractor into part of your normal business operations.<\/span><\/p>\n\n\n\n

In the past, your employer took care of your taxes. Medicare, Social Security, and FICA were all subtracted from your pay, taking all the math and worry out of the equation. Now that you\u2019re a contractor, you\u2019re left to fend for yourself. If you underpay, Uncle Sam and the Internal Revenue Service (IRS) will come knocking. Overpay, and you\u2019re giving the government an interest-free loan. That\u2019s why we\u2019ve compiled a list of everything you need to navigate the hazy waters of taxes as a contractor. With any luck, you\u2019ll quickly become a tax pro.<\/span><\/p>\n\n\n\n

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Do I Need to File Taxes as a Contractor?<\/strong><\/h2>\n\n\n\n

You always need to file taxes as a contractor.<\/b><\/p>\n\n\n\n

If you\u2019re a new contractor, you may hear conjecture and other misinformation about filing your taxes. To many self-employed individuals, finding ways to skimp on taxes is a rite of passage. However, you should take these ideas lightly. Regardless of how much you make as an independent contractor, you <\/span>must<\/em> file taxes. The good news is that the government won\u2019t place a self-employment tax on your income if you earned $400 or less in a given tax year.<\/span><\/p>\n\n\n\n

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When Do I Need to Pay Taxes as a Contractor?<\/strong><\/h2>\n\n\n\n

You should pay taxes quarterly.<\/b><\/p>\n\n\n\n

Unlike an employee, your taxes aren\u2019t deducted each week. As a result, you can fall behind quickly on your taxes as a contractor. Unfortunately, federal, state, and local governments don\u2019t like to wait for their money. Thus, they can legally impose penalties, interest, and late fees on your taxes if you don\u2019t pay the right amount (within 90% of what you owe) every quarter.<\/span><\/p>\n\n\n\n

In a year without any incidents (such as a pandemic or natural disaster), you should pay your quarterly taxes on the following dates:<\/span><\/p>\n\n\n