More and more people are becoming self-employed as workers lose full-time jobs and take longer to find new jobs. It is more important to stay on top of one’s tax obligations than the skill you’re trying to sell.
It is extremely important to be thoroughly familiar with the world of 1099s. One surprise for some people is that the self-employed must pay the full amount of payroll taxes, known as self-employment taxes, while a full-time employee typically pays half.
Maximizing deductions, while minimizing the chance of being audited can be simplified by using such software products as Quicken or QuickBooks.
A professional, such as a Certified Public Accountant, stays abreast of any changes, like the recent increase to 58.5 cents allowed, effective July 1, 2008 as a travel deduction.
There are always changes in the tax code you might not be aware of or might have forgotten. You should have adequate support for all of your deductions. Such tools as a travel log should support your deductions for travel and entertainment.
Some people may deduct a portion of their living expense but the space must be used exclusively and regularly for work. You shouldn’t have an exercise bike or TV in that space.