Year-End Tax Tips for Independent Contractors and Self-Employed Individuals in Raleigh, NC who Need Income Tax Relief
Metro Area: Raleigh, Cary NC MSA
If you are an independent contractor or a self-employed individual in Raleigh or Cary areas, you can always save some money in your year-end taxes if you follow the following tax planning tips.
Tip 1: Do not owe back taxes because you made a mistake in your quarterly estimated taxes
As a self-employed independent contractor, you can avoid paying taxes for some time but it cannot go on always. It is better to pay all your taxes and file the tax returns on time. If you did not file the returns or did not pay the taxes contact an expert tax professional such as an IRS licensed enrolled agent immediately.
Tip 2: Are YOU really a self-employed independent contractor?
Some businesses may mislabel their employees as "self-employed independent contractors", because it gets them income tax relief. If your boss has done that, you should immediately contact a tax professional and explain the situation to him/her.
Tip 3: Are your subcontractors really self-employed independent contractors or are they employees?
Never misclassify your employees as sub contractors. If you're not sure ask a tax expert. Penalty for misclassification of your employees as subcontractors can be very steep. Avoid it.
Tip 4: Get the income next year
If at the year-end, you do not want to pay taxes on some of your income, you can defer them till the next year. This is a totally legal way of reducing your taxes. You can invoice your clients on January 1 of the next year.
Tip 5: Get that medical treatment done at the year-end
If you have to undergo some medical treatments, you should get it done at the year-end. As a self-employed independent contractor, you are entitled to medical expense deduction of 7.5% of your adjusted gross income.
Tip 6: Pay your state taxes before the problem starts
As a self-employed independent contractor, you should always pay your state estimated tax before December 31st. This is one of the best year-end tax tips. When you pay them by December 31, you can get the deduction in that year.
Tip 7: Make your stock market losses work to your advantage
If your portfolio has gone down, it is possible to realize the tax loss before the New Year. You can use long term capital losses to offset any of your long term capital gains, and up to $3,000 of ordinary income.
Tip 8: Give your personal gifts before the year end
As a self-employed independent contractor, it is possible for you to gift up to $13K annually without paying gift taxes. It is possible to gift your child or grandchild for his/her tax-free 529 education plan. Your spouse can match your contributions, which means double benefit for you.
Get expert tax help today by calling Mike Habib, EA at 818-649-8552