Taxes For The Self Employed and Independent Contractors

Self Employed or an Independent Contractor?

To first see if you are self employed or an independent contractor, let us first read the definition taken
right from the IRS.gov web site:

Self-Employed

You are self-employed if any of the following apply to you:

* You carry on a trade or business as a sole proprietor;
* You are a member of a partnership or limited liability company that files a Form 1065, U.S. Return of Partnership, that carries on a trade or business; or
* You are otherwise in business for yourself.

You are also self-employed if you have a part-time business, in addition to your regular job.

Independent Contractor

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax.

And to add to this, people who make money on the internet are also considered self employed.

Now that we know the definition of SE/IC, I will later go into more detail on what deductions
are allowed for the various jobs, as that is a separate, very long post in itself.

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Tim Watson is a tax preparer during the season who also runs an SEO directory and an iPod directory. You may use this article as is provided the resource box stays intact.