As an independent contractor, you’re responsible for paying self-employment tax on any income you make. Self-employment tax can come as a shock, especially when filing your first tax return as an independent contractor.
The IRS defines independent contractors as those who “offer their services to the general public” and whose services are not controlled by an employer. Independent contractors can include:
- Rideshare service drivers, like Lyft and Uber drivers
- House cleaners and maids
- Construction workers and contractors
Self-employed workers are unique because they don’t have taxes withheld from their paychecks like traditional employees. Because of this, the Internal Revenue Service allows self-employed professionals to claim deductions for work-related expenses, which helps lower their tax burden.
Thus, when working as an independent contractor, it’s vital that you track your business expenses . Doing so can net you a significant reduction come tax time. When you file your tax form for the year, you’ll want to complete a Schedule C. You’ll likely list the majority of your deductions in Part II of your Schedule C (Form 1040).
If you have less than $5,000 in claims, you may be able to use Schedule C-EZ. Whichever you choose, both are due April 15th along with your annual tax return.
Below, you’ll find a breakdown of common expenses and tax deductions for independent contractors. You’ll also find some industry-specific expenses, which could impact Uber taxes and other similar self-employment taxes.