Because federal and state tax regulations are constantly changing, experts often advise taxpayers to hire an accountant or tax preparer to help with filing the paperwork. Get the right resources. That's a perilous way to operate, says self-employment law expert Stephan Fishman. The second edition includes coverage of the major changes brought about the Taxpayer Relief Act of 1997, which included several benefits to the self-employed. One of the biggest mistakes most independent contractors make with tax filings, says Fishman, is not taking all the deductions they're entitled to.
Many contractors overlook valuable deductions, such as the home office deduction.
Check out the tax change. As of 1999, the federal government expanded qualifying criteria for home office deductions. Up until the year before, the home office deduction was strictly applicable to those who worked in the home and used their home offices for the majority of their job-related responsibilities. As of 1999, however, the deduction became more much accessible, specifically to self-employed contractors who may use part of their home for administration and paperwork purposes. But while the deduction is now open to a wider tax-paying audience, there are still some serious caveats to consider, say experts.