Self-employment has many freedoms but also many responsibilities, especially when it comes to your tax obligations.
Most Portland workers earn income through their employer and withhold amounts with each paycheck. However, a growing population is entering into the realm of being an independent contractor, whether by choice or because of limited full employment options.
With an increase in these numbers comes the chance that more Americans will face heightened tax liability.
Independent contractors are, generally, not tax experts and often find themselves liable to pay for a large sum at the end of the year. Sometimes, the tax burden is too much to bear, and they may feel at a loss for how to move forward in their situation.
However, working with experts who understand IRS tax codes, credits, deductions, and other forms of unclaimed relief is the first step in finding possible tax relief.
Each situation may be different, and possible forms of relief can include:
- Applying for an Offer in Compromise
- Creating installment agreements
- Working towards penalty abatement
- Applying to qualify as Currently Not Collectible
There are multiple programs offered through the IRS meant to help those who are facing a large tax bill at the end of the year — solutions for which our team is familiar.
Don’t wait until the IRS is knocking on your door; call one of our tax professionals at Instant Tax Solutions today! Let us show you your options for independent contractor tax relief by calling (888) 363-8958 or by completing our online form.
Get Portland Independent Contractor Tax Relief
The “gig economy” has gained popularity in Oregon and across the rest of the US. With the internet, we are all more connected than ever.
Today, 15% of the US labor force is made of independent contractors, and this number is growing. Advancements in technology have opened the door for new independent contractors to enter the market.
There are over 31 million independent contractors in the US, a number which has doubled since 2021. An increasing number of independent contractors means that more workers are receiving 1099s and doing their own taxes, which increases the need for 1099 tax help.
What Is a 1099?
Independent contractors receive a 1099-Misc from their clients/contract-awarders each year. With 1099s comes complete tax liability, meaning there is no employer to help chip in for your tax contributions to Medicare and Social Security.
The IRS defines 1099 as the form used to declare miscellaneous income. Taxpayers receive 1099 from income that is at least $10 in royalty or broker payment in place of dividends or tax-exempt interest or $600 from providing goods and services, as well as any of the following:
- Any direct sales of at least $5,000 in consumer products (buyer must be outside of the retail space)
- Cash payments for aquatic life you purchase from a fisherman(woman)
- Crop insurance proceeds
- Earned prizes and awards
- Fishing boat proceeds
- Cash paid from a notional principal contract to an individual, partnership, or estate
- Medical and health care payments
- Payments made to attorneys
- Rental payments
- Other miscellaneous income
Although independent contractors work for a limited number of clients throughout the year, their earnings can easily supersede the $600 limit established by the IRS. In many cases, independent contractors find that they will collect multiple 1099’s at the end of each tax year.
The numerous 1099s require additional documentation, knowledge of deductions, and more.
Choosing to work with a tax service that knows what you can deduct helps minimize your tax exposure. At Instant Tax Solutions, our team does just that; we are prepared to provide information and expertise so you can find 1099 tax relief.
How Our Portland 1099 Tax Relief Services Help Independent Contractors
The process of doing your taxes can be daunting for anyone unfamiliar with the process.
As an independent contractor, you are not just responsible for paying your taxes. You are also responsible for understanding enough tax law to keep track of your earnings, expenses, and what you can possibly deduct at the end of each year.
Independent contractors are expected to pay 100% of their contributions towards social security and income taxes, meaning they tend to pay a higher tax rate than someone receiving a W2 through their regular employer.
With multiple clients, inconsistent monthly earnings, and, in many cases, handling all the nuances of essentially running your own business, one can easily forget to report earnings at the end of the year. On top of it all, independent contractors are expected to make quarterly payments to the IRS based on their estimated tax assessment, as opposed to waiting to pay it all at year-end.
This type of situation is exactly where hiring tax experts to help you organize and understand your tax liabilities can come in handy.
Receiving Portland Independent Contractor Tax Relief
Missing quarterly tax filings can happen easily. To make matters worse, independent contractors face the additional burden of setting aside these quarterly payments, which can create limited funds to pay down any prior tax obligations from previous years.
Taxpayers who fail to pay quarterly taxes on time may face additional penalties and interest charges.
What Common Deductions Are Used for Portland 1099 Tax Help?
Independent contractors should know what business expenses they can deduct from their revenue before filing their taxes. By completing Form 1040, independent contractors total the types of transactions that can be written off.
The tax code allows independent contractors to deduct certain expenses to avoid paying high amounts to the IRS. Common deductions include:
- Half of unreimbursed dining expenses and costs directly related to travel or business-building
- Particular office furniture and fixtures (not covered by the home office deduction)
- Utilities not covered by the home office deduction, including internet and cell/telecoms usage
- Consumables, like batteries or light bulbs
- Employee wages and fees paid for services/products, including the work by other contractors.
- Some equipment used by the business (if they have more than one year of life, they may be depreciated for larger tax savings)
- Expenses related to services and finances, including credit card processing fees, transaction fees, taxes, and more.
- Home office deduction
- Mileage or vehicle value depreciation caused by the necessary use of a vehicle
Keeping records of the expenses going in and out of your business is important to make it easier to understand what deductions apply to you and to decrease your tax liability.
What Kind of Services of Portland 1099 Tax Relief Services Are There?
The IRS offers multiple types of tax relief services available to independent contractors. Each program is designed to accommodate certain types of companies, whether it employs people or many other factors.
Not all tax relief types apply to every independent contractor. Unfortunately, learning what options are available to you can be hard to determine when you are on your own.
When you work with a tax expert, they will show you what programs are available, given the size and earnings of your business.
Some examples of relief programs are:
- Offer in Compromise
- Installment payments
- Penalty abatements
- Currently not collectible status
- Filing for an amended return
Offer in Compromise
An Offer in Compromise allows the delinquent taxpayer to propose payment to settle their debts below what they owe. This works for cases with more debt than income or where paying the IRS would create significant financial hardship for that taxpayer.
To receive approval, the filer must be up to date with all their filings and other payments, and they must propose an offer that the IRS is willing to accept.
Independent contractors often face significant tax liability at the end of each year. Although they are supposed to make quarterly payments, those sums can be large and sometimes difficult to pay.
Unlike working in a traditional company, where you are paid consistently every two weeks, an independent contractor has irregular paychecks. In some months, they may not be paid at all.
Submitting payments to the IRS in installments is one of the most common and easiest ways to make consistent payments and settle outstanding debt.
Especially for first-time offenders, removing any penalties and interest accrued due to late payment is possible. The IRS and Department of Revenue may elect to waive penalties to bring down the total balance that is owed.
Currently Not Collectible
Filers who receive a Currently Not Collectible status have provided proof that they cannot pay the IRS due to financial hardships. Although they are still accruing interest and penalties for their overdue accounts, they will not be bothered by revenue agents or collections since they cannot make payments without creating severe financial hardships.
Note that this status is temporary, as the IRS re-evaluates the ability to pay at least once annually.
Filing an Amended Return
It is possible to miss deductions, credits, and other programs and incentives from past year filings. Although these may not seem like much, they can significantly chip away at the total amount owed when they are added together.
Instant Tax Solutions can help you review your past finances and determine where you may have overlooked possible declarations that would allow you to reduce your outstanding tax burden. Amended returns can be filed within three years of the initial return due date.
Are You an Independent Contractor Who Owes the IRS? Call Now
Owing unpaid taxes to the IRS is not a great situation to be in. Fortunately, it is a situation that comes with solid solutions.
This is made easier when you choose to work with the right tax professionals who know how the IRS works, the available programs, and the steps needed to find a solution to pay your overdue taxes.
The tax professionals at Instant Tax Solutions clearly understand how IRS tax relief programs apply to you. If you want to learn more about seeking tax relief, reach out to Instant Tax Solutions today by calling (888) 363-8958 or completing our online form to get in contact with someone on our team.