Working at home as an Independent Contractor can be a great choice if you value flexibility and want to be your own boss. Here are 6 things that will make taxes a little easier for those who wish to pursue a career as an Independent Contractor.
1. Keep receipts to EVERYTHING – Even if you just buy a pen or some Post-its, keep the receipts. Every little bit helps!
2. Measure your office space – If you have a dedicated office space in your home then you are entitled to a tax credit. The IRS will ask that you provide measurements in order for you to receive the credit.
3. Keep any utility bills – Utility bills are considered a business expense. If you have an electric bill then you can calculate (or estimate) what percentage of that bill goes towards your home office. That total can be written off when you file your taxes.
4. Even your old computer can be written off if it’s used for business – Your computer will soon become your best friend. At tax time you can get a credit for the cost of your computer, even if it is old. What they will do is take the cost of the computer new and adjust the price based on the age. This is an easy tax credit for the machine that you will use the most.
5. Stay Organized – Invest in some folders (another tax write off!) and put all receipts used for your business in the folders! If you are working multiple work at home jobs, keep those jobs separate! Background check receipts, receipts for equipment you purchase for a certain job, etc. Keep your businesses separate so that you aren’t disorganized when it is time to get your taxes done.
6. Don’t Panic – I know that it can be overwhelming for you when you first have to file your taxes as an independent contractor, but don’t panic! If you do the job yourself, use software like Turbo Tax. You will need the small business version because – as an independent contractor – you are considered your own business. Don’t worry; it’s not as hard as it sounds, and they will walk you through everything, step by step.