Consultants - Tax Returns for Consultants

Consultants

Consultants play a vital role in business. Some are employees and some work as independent contractors. Those working as employees will receive a W-2 from their employer, and those working as independent contractors will receive a 1099 if they are working as sole proprietors. All consultants may be eligible to deduct unreimbursed expenses that are necessary and ordinary in performing their duties. However the way expenses are treated for these different classifications for tax purposes is very different. Either way it is important for all consultants to keep records, and logs to substantiate their expenses. If you have questions regarding acceptable substantiation records please do not hesitate to contact us.

Consultants working as employees will deduct their expenses as job related expenses on their tax return. These deductions may effect their taxable income based on their unique situation..

Consultants that work as independent contractors are actually running a business of their own. Making sure you account for all expenses that you incur is vital to the success of your business, and is required to accurately prepare your tax return, and determine your tax liability. These expenses will be deducted from your earnings to determine the profit from your business. Not only do you pay income tax, but you will also pay employment taxes on the profit from your business. You may also be required to make quarterly estimated tax payments based on your earnings. Typically you are required to make payments that equal at least 90% of the current years tax liability, or 100% of 2008 tax liability, whichever is smaller. Therefore it is important to track your income and expenses throughout the year to estimate your earnings, and make these estimated tax payments as required. Please call us if you have any questions regarding your particular situation.

Please click on one of the links below for items that commonly effect consultants.

Business Use Of An Automobile

Internal Revenue Service increases Per Diem Allowance....

The Home Office Deduction