Ryan Vaughn walks independent contractors through filing 1099 taxes: pick a business entity first, since it determines which forms you need. Build a profit-and-loss statement to find your deductions, then use tax software to avoid the math errors that trigger IRS audits.
How do I file taxes myself as an independent contractor? So by default, when you get it as an independent contractor, that means you have 1099 income or self-employed income. This allows you to take advantage of the same tax code that large corporations, Fortune 100 companies take advantage of. To file your taxes, you first are going to have to determine how you've set up the entity structure for your income. Now, we have lots of videos and information on the best way to figure that out, so I'm not going to spend a lot of time on this video talking about the specifics, but ultimately you want to choose the right choice between Sole proprietor, LLC, S corporation, C corporation, partnership. Because as an independent contractor you're a business owner and so you need one of those business structures. The structure you choose will tell you what you need to file. You may need to file a separate partnership tax return, you may need to file a separate S corporation tax return, or you may file a Schedule C form On your personal tax return, which is your 1040. If you're doing this yourself, find a tax software that has the forms that you need in order to file for yourself. Now, as an independent contractor, you'll have your business income, but you're also allowed to take deductions. So you're going to want to make sure you've gone through your statements, uh, Maybe you've done your own bookkeeping, but you basically have created what we would call a profit and loss statement where you have your taxable income, or the income you've received, sorry, the income you've received, and then you have underneath it all the different expenses that you can write off against that income. We also have lots of material out there and content on what are things you can write off. So feel free to also look at those, and then that leaves you with a net income number. However you're filing the business, again, that could be a Schedule C on your 1040 personal return, it could be a separate S corporation filing, it could be a separate partnership filing. You're going to put that income and your expenses on that form or the separate filing. That information now is reported on your personal return. For example, if I'm filing an S corporation, that's an 1120-S tax form, that will create a K-1 for me. I use the K-1 and put that information on my 1040 tax return. I think in today's day and age, it would be crazy for anybody to try to do this printing off forms and filling them out by hand. Every single person I've ever known who's tried to do that always gets audited because at a minimum they've mathematically messed something up, and the IRS's system is a computer that first checks things. It's easy for it to spot a mathematical error. Then they get a letter, and now they've opened their risk that they want a full-fledged audit. At a minimum, if you're going to do this yourself, at least use a software. Now depending on what you want to do, there are companies out there that allow you to walk in and do like get your stuff repaired. Please just keep in mind most of those companies, they've trained their people on how to use a tax software, so you're really just paying a premium for someone to do your return in a software. They're not really going to help you identify strategies and things. We do have a tax packet that has strategies involved. If you're interested in getting that, please click the link. But hopefully I've answered your question from a general standpoint of what you would need to do if you plan on filing your taxes by yourself. But remember, the IRS really just wants to screw you over however they can, so keep that in mind with whatever option you choose.
