Common Tax Challenges for Independent Contractorss
Independent Contractorss often face specific tax situations that can lead to IRS liens and collection actions. Understanding these challenges is the first step toward resolution.
Resolution Options Available
Regardless of your specific situation, several IRS programs may help resolve your tax debt.
- Installment Agreement - Monthly payments you can afford
- Offer in Compromise - Settle for less than the full amount
- Penalty Abatement - Remove penalties for reasonable cause
- Currently Not Collectible - Pause collections during hardship
Frequently Asked Questions
If you should have been an employee, you can file Form SS-8 with the IRS for a determination. If reclassified, the employer becomes responsible for employment taxes. This can significantly reduce your personal tax liability.
Yes, you can deduct ordinary and necessary business expenses on Schedule C. This includes equipment, supplies, home office, mileage, and other costs directly related to your work.
The IRS receives copies of all 1099s and will send you a notice (CP2000) proposing additional tax. Penalties and interest are added, and repeated non-compliance can lead to audits and criminal investigation.