| With the recession and surging unemployment swelling | | | | New Year's. The secret to income tax relief is just like |
| the ranks of people reinventing themselves, millions of | | | | the secret to great comedy...timing. A self-employed |
| taxpayers are setting up home-based businesses and | | | | independent contractor's medical expense deduction is |
| providing their services as self-employed independent | | | | limited to 7.5% of the self-employed independent |
| contractors. Whether your new self-employed | | | | contractor's adjusted gross income. If you haven't |
| independent contractor status is a temporary measure | | | | reached that cap yet, go have those dental |
| or part of your long-planned road map to fortune and | | | | procedures or that bit of elective surgery (we're not |
| glory, there are tax dangers (plus surprisingly lucrative | | | | just talking about that nose, the swimsuit season will be |
| income tax relief) that should grab the attention of | | | | here again before you know it). As long as you're |
| every self-employed independent contractor. | | | | under that 7.5% limit, you can get income tax relief |
| We know the IRS is targeting self-employed | | | | from your standard variety medical expense |
| independent contractors. The government estimates | | | | deductions. A little known year-end income tax relief tip |
| that 85% of the $345 billion tax gap is due to | | | | - you don't even have to pay for the medical |
| self-employed individuals – freelance professionals | | | | procedures before January 1, 2010. Just put the |
| and independent contractors who don’t get a 1099 | | | | medical charges on plastic and pay the minimum |
| the way large business employees do. Being a | | | | balance. As long as you had the procedures in 2009, |
| self-employed independent contractor means you're | | | | the deduction is good. If your medical expenses are |
| the boss, unfortunately it also means you're the one on | | | | already over the 7.5% level of your self-employed |
| the hook for any problems with back taxes. How you | | | | independent contractor's adjusted gross income, you |
| handle your back tax problems will not only determine | | | | should delay breaking your leg until January 1st, 2010. |
| whether your business will succeed, but it also carries | | | | Self-Employed Independent Contractor Year-End |
| the real threat of jail time if you get it wrong. | | | | Income Tax Relief Tip #6: Pay your state taxes |
| To learn more ways to legitimately maximize | | | | before the ball drops. As a self-employed independent |
| deductions while avoiding IRS problems, check out Part | | | | contractor, one of the best income tax relief strategies |
| 2 of this series on Tax Help Tips for Saving Money on | | | | is to pay your state estimated tax before December |
| Taxes for Freelance Professionals and Self-Employed | | | | 31st. If you pay by December 31, 2009 you get the |
| Individuals. | | | | deduction (on your federal return) in 2009. You can |
| Read on for my best year-end tax help tips to show | | | | also charge these expenses on your credit card(s) in |
| self-employed independent contractors how to get the | | | | 2009 and receive the deduction in 2009, even though |
| biggest income tax relief possible. | | | | you won’t be paying for them until 2010. If you are |
| Self-Employed Independent Contractor Year-End | | | | having issues paying your estimated state taxes, a tax |
| Income Tax Relief Tip #1: Did you owe back taxes | | | | attorney can give you tax help to get the maximum |
| because you made a mistake in your quarterly | | | | income tax relief possible. |
| estimated taxes? If you've spent your life working as | | | | Self-Employed Independent Contractor Year-End |
| an employee, you may be delighted that the first | | | | Income Tax Relief Tip #7: Make your stock market |
| money you receive as a self-employed independent | | | | losses work to your advantage. If your personal |
| contractor is a flat fee without any taxes taken out. | | | | portfolio has taken a nose dive, realize your tax losses |
| But your joy should be short-lived, this is a case of the | | | | before New Year's Eve. Long term capital losses can |
| taxman being delayed but not denied. To get a | | | | be used to offset long term capital gains, and up to |
| preliminary idea about self-employment taxes check | | | | $3,000 of ordinary income, with any remainder carried |
| out Before you start, you should contact a tax | | | | forward for use in future years. This is about getting |
| attorney to make sure you have structured your | | | | income tax relief not whether you made the right |
| business correctly. If you haven't gotten tax help from | | | | investment choices. If you still believe those stocks will |
| a tax attorney yet, there is still time to structure your | | | | go up again, buy them back on January 1st. Keep in |
| business to get the maximum income tax relief before | | | | mind that some mutual funds can have high capital |
| the year end. (After that you're stuck with your | | | | gains distributions even as they lose money. The best |
| mistakes. Well, mostly. A good tax attorney or tax | | | | income tax relief advice is to ditch these first because |
| resolution specialist can still get you out of back tax | | | | they are hitting you with a double whammy. As a |
| trouble, but the best approach is to avoid owing back | | | | self-employed independent contractor you have |
| taxes in the first place.) | | | | access to some of the best retirement accounts out |
| Self-Employed Independent Contractor Year-End | | | | there like a SEP-IRA. To understand which investing |
| Income Tax Relief Tip #2: Are YOU really a | | | | should be done as part of a retirement account, and |
| self-employed independent contractor? Many | | | | which should be in your personal portfolio and when to |
| businesses (large and small) mislabel their employees | | | | take losses for maximum income tax relief, get tax |
| as "self-employed independent contractors" to get | | | | help from an experience CPA or tax attorney. |
| income tax relief and sidestep a host of state and | | | | Self-Employed Independent Contractor Year-End |
| federal laws. The IRS has a comprehensive page to | | | | Income Tax Relief Tip #8: Give your personal gifts |
| help determine whether you're an employee or a true | | | | before Rudolph goes flying. As a self-employed |
| self-employed independent contractor: If your boss | | | | independent contractor, you can give a friend or family |
| has you misclassified as a self-employed independent | | | | member up to $13K annually before the year end |
| contractor and you file as one, you could be in a heap | | | | without having to pay gift taxes. (Your spouse can |
| of trouble when the IRS comes knocking on either | | | | give that same amount to the same individual.) You |
| your door or your boss's door to collect back taxes. | | | | can also give that same amount to your child’s or |
| Suddenly, all those lovely deductions go out the | | | | grandchild's tax-free 529 education plan. If you haven't |
| window and your tax bill explodes. If you feel your | | | | funded such a plan yet, you can make a single |
| boss has misclassified you as a self-employed | | | | contribution covering five years of gifting. That's |
| independent contractor, contact a tax attorney or tax | | | | $65,000 you can give per donor per recipient tax-free. |
| resolution specialist immediately for some | | | | (Your spouse can match that contribution as well.) |
| self-employed independent contractor back tax help | | | | Self-Employed Independent Contractor Year-End |
| before the year ends. | | | | Income Tax Relief Tip #9: Give gifts to clients: Gifts to |
| Self-Employed Independent Contractor Year-End | | | | clients are limited to $25 per recipient per year, BUT if |
| Income Tax Relief Tip #3: Are your subcontractors | | | | the gift has your embossed logo on it and tells about |
| really self-employed independent contractors or are | | | | your services, it isn't a gift, it is an advertising or |
| THEY employees? While you may be a true | | | | promotional expense. There is a fine line here, a quick |
| self-employed independent contractor, you need to | | | | call to a CPA or tax attorney for year-end tax help will |
| establish whether your subcontractors are | | | | help you stay on the right side of the law. |
| self-employed independent contractors or employees. | | | | Self-Employed Independent Contractor Year-End |
| According to IRS Summertime Tax Tip 2009-20, "the | | | | Income Tax Relief Tip #10: Take your retirement |
| cost of misclassification to employers in additional | | | | contribution to the max. Self-employed independent |
| taxes, as well as administrative time, or the loss of | | | | contractors have the best income tax relief vehicle the |
| tax-favored status for employee benefit plans, can be | | | | federal government has ever offered. While individual |
| steep." If you're not sure, contact a tax attorney or tax | | | | worker contributions to a simple IRA max out at |
| resolution specialist to get tax help immediately. | | | | $11,500, if you're under 50 in 2010 ($14,000 if you're |
| Self-Employed Independent Contractor Year-End | | | | over 50), how is this for serious income tax relief, as a |
| Income Tax Relief Tip #4: Want to get income tax | | | | self-employed independent contractor you can use |
| relief on your 2009 self-employed independent | | | | SEP-IRAs to contribute 25% of your wages (or up to |
| contractor work by delaying paying taxes until 2011? | | | | 20% of your Schedule C income) up to a maximum of |
| For a host of income tax relief reasons, a | | | | $49,000. The income tax relief to a self-employed |
| self-employed independent contractor might want to | | | | independent contractor are massive. A tax lawyer or |
| defer getting paid until next year. If you did work in | | | | CPA an give you the tax help to set up the right |
| 2009 but don't want to pay 2009 taxes on it, simply | | | | retirement vehicle for you. |
| wait to invoice your clients until January 1, 2010. This | | | | I know that this is a long list but the income tax relief |
| 2009 income tax relief technique is perfectly legal for | | | | you can get from just paying attention to the calendar |
| self-employed independent contractors as long as you | | | | is huge. These 20 self-employed independent |
| pay taxes on that income in your 2010 tax return. | | | | contractor tax help tips can make the difference |
| Self-Employed Independent Contractor Year-End | | | | between being a Grinch and having a Happy New |
| Income Tax Relief Tip #5: Get that root canal before | | | | Year. Your call. |