As a independent contractor how can I avoid paying taxes?

Question

I don't mean completely... but how can I take advantage of it as an independent contractor? Are there any loop holes?

Thanks Texas Girl.... Exactly type of information I was seeking.... I guess I should have just asked for that. :) PS I'm completly honest but ignorant in this area.

Wow a 15.3% tax...I hadn't factored that in... but it's not so bad... good heads up!!!

Answer 1

To continue with the above answers, don't forget that you get to deduct from gross income 1/2 of the self employment taxes that you have to pay. So that is an addtitional deduction that you can get as an independent contractor.

There are many expenses that you incur in connection with your business so make sure to keep track of them, including if applicable, vehicle expenses (either actual or mileage), depreciation on tools and equipment purchased for your work. It might be a good idea to at least have a meeting or two with a tax practitioner to help you plan this out, but really, if you look at the schedule C you can see the expenses listed. Also, you can deduct costs for continuing education, publications/dues/subscriptions that are integral in your business. Just don't get too excited about deductions.

Answer 2

Keep very good records of any expenses you have in connection with earning your income.

It would be a good idea to talk to a CPA as soon as you can. He or she might be able to give you some good ideas on what expenses you will be able to deduct. That doesn't mean that you have to have them prepare your tax return unless you want to.

The 15.3% self employment tax isn't as bad as it sounds, since if you were working as an employee, half of that amount would have been deducted from your paychecks anyway. It just looks like a huge amount since you see it all at once. The other half would have been paid by your employer, so that is extra that you're paying.

Answer 3

You can't, unless you are dishonest! You can take advantage of legitimate deductions - keep really good records. No loop holes.

Yes, you have to pay 15.3% for SE tax. It is the same are when an employee pays 7.65% and the employer matches it. As a self-employed person you pay everything.

Answer 4

You can't "avoid" paying taxes, but you can lower the amount you pay by keeping up with you business expenses so you can deduct them on your Schedule C at the end of the year. As a self employed individual you have a wide array of options available to you as far as deductions go. You should get a copy of a blank Schedule C and look over it to see what you can deduct. For example, you can deduct the cost of your goods sold, the amount you may pay in rent for running your business, the cost of supplies needed to run your business, etc.

Answer 5

You should go sit down with a tax professional that is familiar with the industry that you work in. Do that as early as possible. They will likely save you more than you will pay them. Information here can be good but it can also be misleading if it does not fit your individual circumstances.

Answer 6

You are eitherer completely honest, or you cheat.