4 Reasons You May Need A Tax Attorney As A Contractor
Without question, business taxes can be complicated. If you are an independent contractor, your tax situation can be even more complex. Take a look at a few reasons you may need to talk to a tax lawyer as a contractor.
Understand the Differences Between State and Federal Tax Obligations
State and federal tax obligations can look completely different in some states. And, as a contractor or sole proprietor, this can make your tax situation even more complicated. Tax lawyers spend many years getting to know the tax laws in the states where they practice, but they also know the laws on a federal level. If you have specific concerns or have problems with either a state or federal return, be sure to seek an attorney for advice.
Get Help With Employee Tax Requirements
If you hire employees as a contractor, this can change your tax-filing obligations and what forms have to be filed. Unless the people you hire are brought on as sub-contractors, you may be responsible for deducting taxes from their pay. This tax scenario can get pretty complicated, and it is easy to inadvertently do something wrong that lands you in a tax audit. Therefore, it is a good idea to seek legal counsel.
Avoid Issues Caused by Unacceptable Tax Deductions
As a contractor, you can have different types of deductions that are perfectly acceptable on your taxes. For example, a general contractor can deduct expenses like:
- Vehicle usage, fuel used, and necessary maintenance
- Equipment rentals for jobs completed
- Expenses related to waste disposal with project demolition
- Costs associated with paying for additional help
- Unpaid contracts or bills
As many deductions as there are, there are also deductions that are not acceptable. In the event you file a deduction that is not approved, this can cause some complications with your taxes and your tax bill. Talking to a tax lawyer can help you wade through the process to get an amended return filed.
Get Insight if You Are Facing a Tax Audit
Learning that you are going to be audited as a contractor can be an intimidating situation. Oftentimes, audits go smoothly with no serious repercussions. However, it is good to be prepared in advance if you are notified that you are being audited. Therefore, reach out to a tax attorney to get advice about what documents should be prepared and what things you should expect through the auditing process.
Contact a local tax attorney to learn more.