A Comprehensive Guide to Filing and Paying Taxes as an Independent Contractor

💼There are different forms to be filed and taxes to be paid depending on whether you are a sole proprietor, single member LLC, or single member LLC taxed as an S-corporation.

💰As an independent contractor, you may owe self-employment tax, federal income tax, and state income tax.

📝For sole proprietors and single member LLCs, forms 1040, Schedule C, and Schedule SE need to be filed. For single member LLCs taxed as S-corporations, Form 1120S and Schedule K-1 are required.

📅Quarterly estimated tax payments should be made if you expect to owe more than $1,000 in self-employment taxes.

💼Having a separate bank account for your independent contractor income and expenses is recommended for easier accounting and IRS compliance.

What forms do I need to file as an independent contractor?

—The forms you need to file depend on whether you are a sole proprietor, single member LLC, or single member LLC taxed as an S-corporation. For sole proprietors and single member LLCs, you need to file Form 1040, Schedule C, and Schedule SE.

What taxes do I need to pay as an independent contractor?

—As an independent contractor, you may owe self-employment tax, federal income tax, and state income tax.

What is self-employment tax?

—Self-employment tax is a tax on your self-employment income and is currently set at 15.3%. It includes both the employer and employee portions of Social Security and Medicare taxes.

Do I need to make estimated tax payments?

—If you expect to owe more than $1,000 in self-employment taxes, the IRS requires you to make quarterly estimated tax payments.

Is it important to have a separate bank account for my independent contractor income and expenses?

—Having a separate bank account for your independent contractor income and expenses is recommended for easier accounting and to ensure compliance with IRS regulations.

00:00This video provides a comprehensive guide on how to file and pay taxes as an independent contractor.

00:28Crystal, a CPA at Life Accounting, introduces the topic and encourages viewers to subscribe to her channel for more tax-saving tips.

00:53The first question addressed is what forms need to be filed as an independent contractor.

02:13Different forms are required depending on whether you are a sole proprietor, single member LLC, or single member LLC taxed as an S-corporation.

05:40Crystal recaps the forms and taxes required for sole proprietors and single member LLCs compared to single member LLCs taxed as S-corporations.

06:50Tips on staying compliant with the IRS include keeping track of 1099 forms, making quarterly estimated tax payments, and having a separate bank account for income and expenses.

08:36Crystal concludes the video and invites viewers to ask any questions they may have.