With more and more freelancers, self-starters, and gig employees joining the workforce — on top of more workers being classified as independent contractors — it’s become more important than ever to understand the complexities that come with keeping up with 1099 income and taxes.
Individuals who receive 1099 income can enjoy many benefits, including more freedom to set their own hours or choose the type of work they accept. On the other hand, they are expected to keep up with their own self-employment taxes, submitting estimated payments on a quarterly basis.
It’s easy to miss these payments, leaving you with a big bill come tax time, on top of likely penalties for failure to file quarterly. At the end of the tax year, 1099 income recipients may feel as if they have no way to catch up, on top of needing to prepare for next year’s taxes.
Luckily, you have options, and that’s where we come in. Our tax experts can help you take advantage of any deductions, credits, or other forms of unclaimed relief you may have missed in the past three years.
We’re your go-to for all things 1099 tax help, so reach out to our team today. Call (888) 485-8109 or contact us online to learn more about your options for relief today!
Boise Independent Contractor Tax Relief
In plain terms, a 1099 is a tax document that reports the income you’ve earned as a ‘non-employee.’ If you’re accustomed to receiving a W-2 form from your employer, think of the 1099 as its self-employed counterpart.
While self-employment comes with its perks, it’s safe to say that filing a 1099 might be the lifestyle’s less appealing aspect.
Unlike those classified as employees and who have parts of their paycheck withheld by employers for certain taxes, those receiving 1099 are expected to make 100% of their own contributions to social security and income taxes. As a result, the self-employment tax rate is often much higher than that used for an employee in the same earnings bracket.
Worse, for those who failed to carefully prepare for the EOY filing, paying a lump sum on your full year’s earnings can pack quite a punch.
Whether you’re filing for the first time or struggling to produce the appropriate funds, navigating a 1099 can feel overwhelming. That said, there are still plenty of practical solutions available to help you ease your financial burden.
Below, we’ll quickly touch on two of the most popular tax relief programs that can help you regain control of your finances.
Offer in Compromise
If you’re facing a significant tax debt that you do not believe you can realistically pay off, an Offer in Compromise may be your lifeline. This IRS-backed program allows eligible individuals to settle their tax debt for less than the full amount they owe.
That said, not everyone will qualify.
Am I Eligible for an Offer in Compromise?
To be eligible for an OIC, you must have a legitimate ‘tax liability.’ This means that you must owe the IRS taxes that you genuinely can’t afford to pay in full.
In total, your tax liability will include the amount of tax you owe plus any penalties and interest. That said, in order to qualify, you must be up to date on your tax filings.
This means that you must have filed all of your required tax returns for the current tax year because if you have any unfiled tax returns, the IRS will typically not consider you a worthwhile candidate for an OIC.
Finally, and perhaps most importantly, your eligibility will be evaluated based on your current financial situation. The IRS will consider your income, expenses, assets, and future earning potential to determine whether you have the ability to pay your tax debt in full or through an installment agreement.
If your OIC is accepted, you must agree to comply with the terms in full and in the timeframe presented, meaning you must either render a full lump sum or keep up with your agreed-upon installment proposal. You’ll need to meet all timely filing and payment deadlines and pay all of the taxes owed during that period in order to remain compliant with your deal with the IRS.
To begin your application, you’ll need to decide whether you’re filing on one of two primary grounds: Doubt as to Liability or Doubt as to Collectibility. Our team can help you choose the appropriate grounds for your situation and help you file your application if you seem like a strong candidate.
In some situations, the IRS will remove certain penalties or reduce their cost. This practice is referred to as ‘penalty abatement’ and can be helpful for those who have filed a 1099 and accrued penalties due to mistakes, delays, or other reasonable causes.
The most common types of penalties are the ‘Failure to File Penalty’ and ‘Failure to Pay Penalty.’
For the first type, you may receive a penalty if you don’t submit your tax return before the appropriate filing deadline. In the latter, you may be penalized if you owe taxes and don’t pay the full amount you owe by the relevant due date.
Am I Eligible for Penalty Abatement?
To qualify for penalty abatement, you typically need to demonstrate that your failure to file or pay on time was due to a reasonable cause — instead of willful neglect. Some common reasons that the IRS may consider as ‘reasonable cause’ may include:
- Natural Disasters: If you were affected by a natural disaster, such as a wildfire, flood, or hurricane, the IRS may be able to remove any penalties you’ve incurred.
- Serious Illness or Death: If you, a family member, or your tax preparer experienced a severe illness (or passed away), you may be eligible to have your tax penalties removed.
- Mistaken Advice: If you relied on incorrect advice from a tax professional or misunderstood your tax obligations, you may qualify for penalty abatement.
- Financial Hardship: If you can demonstrate that paying these penalties would create a significant financial hardship, the IRS may be able to remove them.
To request penalty abatement, you typically need to write a letter to the IRS explaining your situation and providing documentation to support your claim. Our team can review your situation to help determine your eligibility and then help you work through any necessary next steps.
What Other Boise 1099 Tax Relief Services Can I Use to My Advantage?
In addition to an Offer in Compromise or Penalty abatement, there are other 1099 tax relief services you may be able to take advantage of. These may include:
Installment agreements, also known as payment plans, allow taxpayers to pay off their tax debt in smaller, more manageable monthly installments. This option can be a great solution for those who cannot afford to pay their entire tax debt upfront but can count on a steady income stream for future payments.
The IRS offers different types of installment agreements, such as streamlined or guaranteed agreements. The type of agreement that you’re offered will depend on how much you owe, but we can help you identify the best option for your lifestyle, as well as negotiate for better terms on the installment plan that fits your budget.
Innocent Spouse Relief
Innocent Spouse Relief is a relief option for taxpayers who filed a joint tax return with their spouse — or ex-spouse — but were unaware of any errors, omissions, or fraudulent activities on that return. This type of tax relief is designed to protect individuals from being held responsible for their spouse’s tax liabilities — or poor decision-making.
Ultimately, if a taxpayer disagrees with an IRS decision or action, they have the right to appeal. Boise 1099 users can take advantage of the tax appeals process to challenge issues like audit results, tax assessments, penalties, and more.
This service allows taxpayers to present their case to an independent IRS Appeals Officer, but you must act quickly within the appeals window (usually 30 days from your last notice). You must also have sufficient grounds for an appeal, such as noting a specific mistake in IRS procedure or a failure to recognize critical evidence that was already presented.
Because of the need for specialized knowledge, you generally won’t want to go down this road alone. If you’re considering filing a tax appeal, be sure to reach out to our team so we can help you fight for a fair, equitable solution.
Boise 1099 Tax Help: Navigating IRS Audits and Appeals
Facing an IRS audit — or disagreeing with an IRS decision — can be an intimidating experience, but it’s essential to remember that you have rights and you have options.
So, what does an IRS Audit really look like? Let’s break down what the initial process will look like
- Audit Triggers: An IRS Audit can be triggered by various factors like discrepancies in your tax return or information matching issues, but you can also simply be randomly selected.
- Notification of Audit: The audit process typically begins with a notification letter from the IRS. This letter will specify which tax return(s) are being audited, the reason for the audit, and then request specific documentation for review.
- Preparation: From here, it’s up to you to start preparing immediately. Review your tax return and gather all relevant documentation, such as receipts, financial records, and supporting documents for income, deductions, and credits. Next, be sure to reach out to our tax experts so we can help you get ready for any additional next steps and ensure that you’re prepared if you need to appeal the final decision.
Get Boise Independent Contractor Tax Help Today
If you’re struggling to choose — or file for — the right independent contractor tax relief solution, contact our team today. We’re here to provide the independent contractor tax help you need, and we can help you choose the right service for your situation.
At Instant Tax Solutions, we’re not only experienced in tax relief, accounting, and helping individuals get on top of the debt they owe; we’re also here to help you streamline the relief process from the get-go. Not only that, but we can help you put together a financial plan to get on top of next year’s tax obligations, breaking the cycle of owing year after year.
“Today” is always the best time to start, so reach out to us at (888) 485-8109 or contact us online to set up an appointment and learn how we can help you!