Tag Archives: Taxes

7 tax tips for independent contractors

Working as an independent contractor (IC) has become a way of life for many people in the U.S. The Bureau of Labor Statistics’ most recent report suggests that nearly 7% of the workforce is composed of contingency workers. That is an estimated 10.6 million people working as ICs, and the number may very well have increased since then. If you’re part of this population, do you know the full extent of your tax obligations?

To simplify doing your taxes—and the filing deadline was extended to July 15 due to COVID-19, so you have plenty of time—the IRS has released several essential tax tips for independent contractors. Here’s our breakdown of these tips, plus one of our own.

1. ICs must still pay taxes on their earnings

It is a myth that ICs do not have to pay taxes on the wages they earn. Because ICs are paid differently from W-2 employees, they must also pay their taxes in ways that are unlike employees.

This usually means acquiring a 1099 form from any contracting companies you’ve worked with in the past year. This form will provide the information you need to complete and submit your taxes on your own (or with the help of tax software or a certified public accountant).

2. Are you a gig worker? You have to pay up as well

Like other contingent workers, gig workers must pay their taxes, including income taxes, Contribution Act taxes and Medicare taxes. Though terms such as gig worker and independent contractor may have different connotations and nuances, the IRS and Department of Labor place them in the same tax-paying category.

3. Both ICs and the companies they service have tax obligations

Adhering to government tax requirements is a fact of life for both ICs and the companies they provide services for. A company that uses ICs must require them to complete proper government forms (such as W-9s). This enables you to handle your own taxes in a way that is fair and responsible. The company must also maintain accurate and complete records as to how much contractors were paid. So if you need that information, you know whom to ask.

4. All income is taxable regardless of what form it takes

Some companies may think they can pay ICs or temporary workers in cash to avoid having to deal with tax-related paperwork such as verifying taxpayer IDs. This simply isn’t true. Though paying ICs in cash isn’t against the law, not maintaining payment records to show these cash payments may be, even for part-time or side work. Moreover, contractors must still pay taxes on cash payments they receive from these companies, so keep careful track in your own records as well.

5. Reduce your taxes the right way by writing off expenses

Another tax tip for ICs is keeping track of expenses that may be used as tax write-offs. For contractors in transportation, mileage is a common tax expense that can be written off—but only if records and receipts are maintained in an organized manner. In addition to mileage, home care nurses may be able to write off the cost of scrubs, medical equipment, sanitizing supplies and costs associated with maintaining or renewing licensing. Writing off these expenses can lower your overall tax obligation.

6. ICs have two ways to pay what they owe in taxes

Want a valuable tax tip as an independent contractor who also has standard employment? Submit a new W-4 to your employer to have additional taxes withheld. These additional tax withholdings can cover the taxes you are required to pay when you provide services as a contingent worker.

Independent contractors who do not have standard employment can make tax payments on a quarterly basis. Making quarterly payments helps prevent a surprise tax bill from creeping up at the end of the year. To simplify this process, the IRS has set up a no-cost Electronic Federal Tax Payment System (EFTPS) on its website.

7. Get help through Openforce

If you contract through the Openforce platform, you have a member benefits portal. This gives you access to serious discounts on all kinds of products and services, including tax filing, accounting and bookkeeping services through Equinox, a leading provider of business solutions.

Simply sign in through the User Login button at www.oforce.com and click on Perks in the upper right-hand corner to start exploring your member benefits today.

New Tax Laws May Help Truckers!

Did you know that there are currently more than 1.6 million Americans working as truck drivers, making it the most common occupation across the country in 29 states? And truckers may be major beneficiaries of the president’s tax reform plan with significant tax changes that may directly affect how much independent contractors and owner operator drivers will pay in taxes.

NEW TAX BILL

On December 2, the U.S. Senate passed its version of the Tax Cuts and Jobs, while the U.S. House of Representatives passed its own version of the tax bill in November. With aspirations to have the bill signed by President Trump by Christmas, a committee of representatives from both houses of Congress are working on a reconciled bill with most changes taking effect for 2018.

Most provisions of the tax bill, if passed this year, are scheduled to take effect January 1, 2018. If it slides into next year, lawmakers could make it retroactive or set a new implementation date.

From tax rates on businesses and individuals, to allowable deductions and expensing of your truck, much of what you know about taxes is changing, so it’s important to be aware of the changes currently consideration. Additionally, the fees and expenses related to trucking that are tax deductible are different from any other industry. That’s why as an Openforce member through our Member Benefits program, we are pleased to extend expert tax services and a special offer through Equinox Business Solutions.

Equinox offers a comprehensive array of business services including bookkeeping, tax, and technology solutions, all which enable Equinox’s team of Professional Tax Advisors to help independent contractors manage their business and adapt to changes in their business fast. With over 12 years of leading industry experience and working with independent contractors across the nation in 48 statesEquinox and its people are the Truck Tax Experts.

Equinox experts are closely monitoring how these changes will impact clients and their trucking operations in 2018. Significant tax changes MAY include:

  • You may pay overall lower taxes
  • Your tax liability could be capped at 25%
  • Your itemized personal deductions may be restricted or eliminated
  • The standard deduction for married couples filing jointly may be raised to $24,400
  • Your personal exemption may be replaced by a tax credit of $300 per adult
  • The child tax credit may be enhanced
  • Estate taxes may be repealed for those passing away after 2023
  • The amount excluded from estate tax may double

The bottom line is most truckers should see more money in their pockets with the tax rewrite. But with so many changes and unknowns in the works, you’ll want to consult with a licensed tax professional that can help wrap up 2017, and best guide you through these changes in 2018.

Additionally, if you’re an Openforce member and new to Equinox, sign up today, and you’ll receive $50 off your first annual tax filing!

Contact Equinox via your self-service portal in Member Benefits. Or give them a call at 800-533-4230, email info@EquinoxBusiness.com or visit EquinoxBusiness.com.

Be sure to mention you’re an ‘Openforce member’ to maximize your contractor discounts and benefits.

Please Note: This blog post does not give nor is it intended to give specific tax advice. Your tax situation is unique, and you should consult with your own licensed tax/accounting professional.

New Rules on NYC Freelance Isn’t Free Act

As shared in our previous blog post, also known as Local Law 140 of 2016, the Freelance Isn’t Free Act enhances and establishes protections for independent contractors by creating and protecting their right to protection from retaliation, full and timely payments, and a written contract.

Final Rules Implementing the Act

The NYC Department of Consumer Affairs has since published final rules implementing the Act. With the final rules taking effect soon, it’s important to understand what’s new.

The related legal blog highlights the following final rules, including:

  • The text of the Act states that it applies to “hiring parties,” defined as “any person who retains a freelance worker to provide any service” (with the exception of government entities). The rules expand upon the coverage of the Act to now apply to actions taken by “a hiring party, their actual or apparent agent, or any other person acting directly or indirectly on behalf of a hiring party.”
  • The rules place significant limitations on the terms and conditions that may be included in a contract entered into between a freelance worker and a hiring party. Specifically, any such agreement may not include:
     
    • A prospective waiver or limitation of rights under the Act,
    • A waiver or limitation on the right of the freelance worker to participate in or receive any relief (monetary or otherwise) from a class or collective action lawsuit or proceeding,
    • A waiver of “any other procedural right normally afforded to a part in a civil or administrative action” (such as procedural rights under the federal or state rules of evidence or civil procedure), and
    • Confidentiality provisions that restrict a freelance worker’s ability to disclose the terms of the agreement to the Director of the NYC Office of Labor Standards. 
  • Under the Act, covered entities may not retaliate against freelance workers for exercising or attempting to exercise their rights under the law. The rules further define what constitutes an adverse action in violation of the anti-retaliation provisions of the Act, namely: “any action… that would constitute a threat, intimidation, discipline, harassment, denial of a work opportunity, or discrimination, or any other act that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right” guaranteed under the Act.
  • The rules further state that retaliation “may be established when a freelance worker shows that the exercise or attempt to exercise any right under the [Act] was a motivating factor for an adverse action, even if other factors also motivated the adverse action.” Thus, the final rules establish a motivating factor causation standard for claims of retaliation, as opposed to a “but-for” standard where retaliation would need to be the sole factor underlying the reason for the adverse action taken.
  • The rules clarify that freelance workers are entitled to the protections of the Act “regardless of immigration status” and that prohibited retaliation includes “any adverse action relating to perceived immigration status or work authorization.”
  • For purposes of defining the value of a contract between a freelance worker and a hiring party (both to establish coverage under the Act and to calculate statutory damages for violations of the Act), the rules state that such value includes “the reasonable value of all services performed and/or anticipated, and the reasonable costs for supplies and other expenses reasonably incurred by the freelance worker.”

We will continue to share updates to the act. In the meantime, any client doing business in NYC, or utilizing the services of a contractor who lives in NYC, should consult with legal counsel to ensure they are operating within the confines of the new law.

It’s Tax Time Again: Discounted Services for Openforce Members

Joint or Single Tax Return Just $179

Designed by tax specialists that understand the independent contractor model, our partner Equinox Business Solutions is extending a special discount for Openforce members. Regularly priced at $300, we’ve secured a special rate of $179 for preparing and filing a joint or single tax return. To learn more, an Equinox specialist is ready to help at 1 (800)-533-4230.

Whether it’s your tax filing, tax saving account, accounting or bookkeeping needs, the experts at Equinox will ensure your business takes advantage of all the government programs that are available to you.

This year Tax Day lands on Tuesday, April 18th. It’s generally a good idea to file as early as is practical, as early filing can result in a speedier refund. Filing early is also one of the best safeguards against fraudulent tax returns being filed in your name.

All 1099s were mailed on January 27th and are now available in the self-service portal.

Helpful Financial & Insurance Services

In addition to our tax-related discounts, Openforce also works with several financial and insurance service providers that offer our members the following helpful services:

  • 401k Plan Administration
  • Individual Retirement Arrangements (IRAs)
  • Retirement Planning
  • Disability & Long-term Care

To access these helpful benefits and discounted programs, simply login to self-service portal, your all-in-one resource, and go to your Benefits Section.

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There’s no time like the present to take advantage of these special discounts and services.

Good luck and happy filing!