Tax season is a time of stress for people, especially contract workers. Since there is no definite or fixed income, filling in the blanks can become cumbersome and cause confusion for both the person and their tax preparer. Instead of creating a difficult scenario for tax preparers in MA, you can follow these tips year-round and ease the burden!
1.) Keep Track of Mileage
Whether you fly on a plane or drive a car, there’s no doubt you rack up plenty of miles as you commute to and from work or travel to other locations for work business. Naturally, this takes a toll on your wallet, too. Keeping track of your travel mileage will help your tax preparer estimate your expenses accurately.
2.) Create A Paper Trail
When it comes to money and taxes, having the right figures on hand is a must. If your preparer has any questions, answering them becomes that much easier if you have the earnings and contract agreements right in front of you. Print invoices, contracts, etc. and have accurate figures on each so your complete earnings are easy to explain. Plus, if you are audited, the figures are readily available for the IRS.
3.) Prepare For Payment
While working on your own time, having flexible hours, and having a simple pay system is a draw for contractors, these benefits also carry a bit of responsibility. As your employer pays you, it is probably not taxed on your invoice or other receipt of payment. So, you will owe both the state and government money come tax season. It is wise to put some money aside as you work in a contracting position so you are prepared to pay back the full tax return without putting a strain on your finances.
4.) Keep Tabs On Expenses
Do you park in a parking garage, travel on a commuter rail, or fill up your gas tank frequently? Perhaps you had to buy a brand new computer because the company didn’t supply one? Write it down, or keep the receipts. You had to invest, and your tax preparation should reflect how much you have spent.
5.) Learn About The Appropriate Forms
If you own a business and are self-employed, you need to find the tax forms that allow you to provide the right information. Luckily, Efile has plenty of forms on their website to help you out.
Tax season may seem like a looming black cloud, but it can be easier with the right information. We at Armen C. Derderian, CPA, CGMA are happy to help and are proud to be expert tax preparers in MA. Give us a call at (978)-794-9200 and see what we can do for you!