Taxes & the IRS

Yes. Every dollar you take in for work is taxable income, cash included, whether or not anyone sends you a 1099. The $2,000 1099 threshold is about when your...

Get a W-9 before you pay anyone, then file a 1099-NEC for every unincorporated sub you paid $2,000 or more during the year, sending it to both the sub and...

File anyway, on time. This is the move that saves you the most, and most people get it backwards. The penalty for not filing is ten times the penalty for not...

Once someone is your employee, you have to withhold income tax plus their share of Social Security and Medicare from every paycheck, match the Social...

The Qualified Business Income deduction lets most self-employed tradespeople take 20% off their business profit before income tax is figured, and yes, the...

Not once a year. Four times. When you had an employer, they took tax out of every check and sent it to the IRS for you. On your own, that job is yours, and...

In most states, no. Here is the rule most of the country follows: you, the contractor, are treated as the end user of your materials. You pay sales tax when...

Short version: anything that is ordinary and necessary to do the work. That is the actual IRS test (Section 162 of the tax code), and for a tradesperson it...

Only once your profit is high enough that the payroll-tax saving beats the extra cost, usually somewhere around $80,000 to $100,000 of steady net profit, and...

Construction gets audited more than almost any other kind of self-employed work, because so much of it runs on cash and self-reported numbers. You keep the...

Set aside about 25% to 30% of every payment you take in as profit. For most self-employed tradespeople that covers your federal income tax and your...

Most of it you can deduct in full the year you buy it, using Section 179 or 100% bonus depreciation, instead of spreading the cost over years. Tools and...