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Another tip to people who are self-employed is to check to see whether you are actually self-employed! My first ever “real” job tried to give me a 1099, which would have bumped my income taxes up to 53%. I was shocked, so I did some research. Turns out, you are only self-employed if:
1) You can realize a loss on a job
2) You can decide the method and time frame for your work
3) You operate an independent store front or some other means of acquiring new clients.
So even if you’re “hourly” and you are told you’re a contractor, you can greatly reduce the taxes you pay by checking to see if your situation is actually independent. If you have been paid as a contractor and you should not have been, you will still have to pay your income tax, but you will NOT be responsible for the employer’s commitment.
Basically, if you have a “real job” where you have a boss and you get paid for your time and you don’t have to buy your own materials, you’re an employee, end of story.
I have more research materials on this at home, if anyone else is interested in the official definition of “employee” ask here
and I’ll try to find it later. Or you could google it, I’m not your search engine!
I hired a CPA firm to do my taxes my first year “on my own”. At that time I was simply self-employed. They screwed up twice, I caught both errors (taking Tax Accounting in college actually paid off) and they refiled. I paid $40 for their service on what I assure you was a substantially higher bill.
Last year I used TurboTax’s home & business, as well as their state solution. It walked me through all of my options and I had no issues completing it even though I am now both self-employed and a full-time employee at a company.
After a lot of consideration, I will be using TurboTax again this year. I cannot risk finding another idiot CPA — and yes, the one I went with previously was the “best in town” and “recommended” by the professors in the AACSB accredited business school at the college I attended.
Now, for my filing due in 2009, I will seek a professional as I will be getting married this year and hopefully buying a house. Until then, the software (with some general tax awareness) will do (knock on wood).