Tricky Business: Are you an independent contractor? Then you have your work cut out for you.
It's very easy to make an error with the IRS.
There are many small rules and stipulations that are difficult to interpret.
And if you make the wrong choice, you can wind up buried in debt.
Read these Independent Contractor facts and keep out of trouble with the IRS.
  How do independent Contractors Report Income? This is the tricky part.
If you don't report your income to the IRS, they will hit you with penalties and fees.
Here's what you'll need to do.
  -Report all your income AND expenses on Form 1040 Schedule C "Profit or Loss from Business (Sole Proprietorship)" or Form 1040 Schedule C-EZ "Net Profit from Business," depending on which one applies to you.
  How do I pay Medicare and SSI Taxes? If you make more than $400, you need to pay into the SSI and Medicare systems.
You do this by filing Form 1040 Schedule SE  "Self-Employment Tax.
"  How can I tell the difference between an Employee and an independent contractor?  The best rule the IRS lists for being able to tell if you worker is an employee is this: "Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done.
" Here's another thing to take into consideration- there are some workers who are classified as employees no matter what, they are:  -At-Home Workers that you supply materials and work specifications -Food and Laundry Drivers -Full-time salespeople -Full-time life insurance agents working mainly for one company For more details on classifying your employees correctly, see IRS Publication 505, "Tax Withholding and Estimated Tax.
"  Technicalities: Don't let small errors get you in trouble with the IRS.
Really do your research before you decide to be an independent contractor.
And remember, if anything is over your head, you do have the right to contact a tax professional to help you.
  Now You Have The Smoking Gun...
Use it!