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Taxes

5 Tax Tips For Independent Contractors

Working as an independent contractor is a great way to make a living without answering to a boss, but unfortunately it doesn’t absolve you of your responsibility to pay taxes. Everyone must pay their due, and that includes independent contractors like you. If you’re unsure how to go about filing your taxes as a contractor, or just want to maximize your benefits, read on to learn about the top tax tips for independent contractors everywhere.

Learn About the Filing Process
Independent contractors go through a different filing process from that of standard employees. Rather than incurring automatic tax deductions from your pay and receiving a W-2, as an independent contractor you are expected to make calculated tax payments on a quarterly basis throughout the year. You handle your own taxes, rather than relying on an employer to calculate pay deductions. It may seem like a lot of trouble, but learning this new filing process and sticking to a quarterly payment schedule makes sure that you won’t fall behind.

March 30, 2013

Taxes

What Is The Difference Between Direct And Indirect Tax?

Nothing is certain in life, they say, except for death and taxes. We all have to deal with taxes in one way or another, which would lead the average person to believe that we all have a relatively firm grasp on what taxes we pay. On the contrary, most of us are surprisingly uninformed about our taxes and how they work. There are actually two kinds of taxes that all of us pay–direct and indirect. While we all pay these taxes, very few of us really understand the difference between them. In order to be an informed citizen and an intelligent consumer, it is important to know the difference between direct and indirect taxes.

Some taxes are relatively straightforward and simple, while others can be rather complicated. A direct tax, to begin, is a tax that is imposed directly onto a specific group of people or organizations, and collected directly from them. Income tax, for example, is a tax that is imposed directly onto people in the United States who earn an income. This tax is collected directly from them, either in the form of pay withholding or a personal payment after filing. When you pay your income tax, you are being taxed directly, and if you overpay on this direct tax you are issued a direct refund.

Indirect taxes work in a rather different way. When an indirect tax is imposed, the tax is collected from someone other than the individual or entity responsible for the tax. If that sounds unusual, or possibly even criminal, think about it on a deeper level to see what is really happening. Consider sales tax. Depending on the city and state in which you live, you might pay a tax of anywhere from zero to ten percent on the items you purchase. This sales tax is imposed on the vendors who sell the items, but it is absorbed by the consumers who buy them.

March 11, 2013

Taxes

Different Options Available When You Cannot Afford To Pay Your Taxes

There is no way to avoid paying your taxes and every year we must cough up our fair share. Unfortunately, you might get a tax bill that you might not be able to afford. This can be due to a number of reasons, like an increase in your tax bracket or perhaps you didn’t take into account your total taxable income. While you won’t go to jail, you might have to pay a penalty for being late, but often times the IRS will be lenient. There are a number of options for people that can’t pay their total tax bill and as long as you make the right arrangements you should be able to avoid the stiff fines. Here are some different options that are available when you can’t afford to pay your taxes.

First things first, you always want to send in your return. You want to do this because the penalty for filing your taxes late is far greater than the fines for not paying your taxes on time, especially if you don’t make an arrangement with the IRS first.

When you are looking for some money to pay your taxes, you want to search high and low. Chances are that you will find some money somewhere so that you can start paying off your taxes. This source of cash can be from friends and family, and even credit cards, or cashing in on your paid time off at work. In the end, you will free up your financial burdens by taking care of your tax bill, sooner rather than later.

March 6, 2013

Taxes

How To Prepare Yourself For A Successful Tax Audit

For many taxpayers, the idea of an audit is cataclysmic. Nothing else strikes such fear into the heart of the average taxpayer. You might be conjuring up images of men in suits ready to put you in cuffs and haul you away for fraudulent returns, but you’re most likely worrying too much. While a tax audit is a serious situation, there are many things you can do to prepare yourself for the event and defend yourself against the IRS. If you’ve been honest and accurate in filing your taxes, then you shouldn’t have to worry at all. Whatever your case may be, start preparing as quickly as possible to get through your audit successfully.

First of all, you need to understand that audits are not sent out instantaneously. In most cases, there will be a significant delay in between your filing and your audit–often, a delay of several years. There is a general statute of limitations of three years for tax audits, but this can be extended under certain circumstances. What this means is that you should be hanging on to your tax records for at least three years after filing. You’ll need those documents to defend yourself throughout the auditing process, so make sure they’re on hand and organized.

January 19, 2013

Taxes

Are You Taking Advantage Of Your Provincial Tax Credits?

Did you know that each province and territory in Canada has tax credits that can help Canadians to reduce their provincial income taxes each year? Unfortunately, many people are unaware of the tax credits available to them, and sadly, the ones who do their own taxes but are unaware, are the ones who lose out. Even if you hire a tax professional to file your taxes for you every year, it is still good for you to be aware of what is available to you.

How can I find out what tax credits are available?

If you want to know what specific tax credits are available to you in your specific province or territory, simply go to the Canada Revenue Agency (CRA) website, and check out the section entitled Provincial and Territorial Tax and Credits For Individuals.

October 10, 2012

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