RE: Taxes & Deductions for Independent Contractors

Subject: RE: Taxes & Deductions for Independent Contractors
From: Karen <ekarenski-techwrl -at- yahoo -dot- com>
To: "Nuckols, Kenneth M" <Kenneth -dot- Nuckols -at- mybrighthouse -dot- com>, techwr-l -at- lists -dot- techwr-l -dot- com
Date: Thu, 23 Mar 2006 11:17:14 -0800 (PST)

Oh, this is going to be too much fun! NOT!

I went from unemployment to no income to independent
contractor (Sept-Dec) during 2005. For 2006, Jan as IC
and Feb on as employee. This is going to be too much

Why don't you raise your exemptions up really high for
this year so that less is being taken out of your
monthly paychecks? Since my income was so sporadic
during the previous year, I calculated that I had to
put in 8 exemptions and the government and I just
about broke even for the year (I owed state $100 and
feds owed me about $150.)

--- "Nuckols, Kenneth M"
<Kenneth -dot- Nuckols -at- mybrighthouse -dot- com> wrote:

> Karen said...
> >
> >
> > This is the first time I've had to file as an
> > independent contractor and it's only for 4 months
> of
> > last year.
> >
> > I know I can search the web and find a lot of
> general
> > information about independent contracting and
> TurboTax
> > is very helpful stepping me though the process;
> > however, I'd like to get a technical writers
> thoughts
> > on the deductions that they were most likely to
> miss
> > taking. Disclaimer: I realize no one on this list
> is
> > probably a CPA, but I'd appreciate hearing your
> > responses (aka "lessons learned".)
> >
> Tax year 2005 was the first year I had to file as a
> 1099 contractor, and
> as of January 30, I'm now a "real" employee at my
> company earning a
> salary, getting benefits, and having income withheld
> via normal W-2.
> What I find both annoying and somewhat stupid is the
> government's way of
> basing next year's tax status based on last year's
> earnings. At the
> beginning of 2005 I was a "real employee" of a
> company. About May 1 of
> last year, I became a 1099 contractor for my current
> company, and
> retained that status until January 30 of this year,
> when I once again
> became a "real" employee (back to W-2 instead of
> 1099).
> Due to the way the screwy IRS rules are set up,
> because I was an
> employee for all of 2004, I did not have to pay
> estimated quarterly
> taxes from May - December of 2005 (I downloaded a
> form from the IRS web
> site at the end of June last year, and according to
> the worksheet it had
> me complete it said I did not have to pay estimated
> taxes for the 2nd,
> 3rd, and 4th quarters of the year).
> However, because I had to pay a large lump sum of
> non-withheld taxes
> now, I have been told I need to pay quarterly
> estimated taxes for all of
> 2006, even though I'll have taxes withheld by my
> employer from February
> to December. If I follow that logic, then I'll wind
> up paying about
> double what I ought to pay in taxes during this
> year, and then the IRS
> will be cutting me a huge check at the beginning of
> next year to give me
> back what I overpaid. That doesn't make much
> sense--it sounds like a lot
> of extra work for me and for them.
> I'm curious if anyone else has made the transition
> back to "real
> employee" from 1099 contractor status during the
> year and knows the
> scoop on when to start and when to stop the whole
> quarterly estimated
> tax payments regimen?
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RE: Taxes & Deductions for Independent Contractors: From: Nuckols, Kenneth M

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