Robert J. Fedor, Esq., L.L.C.

Self-employed individuals often prone to making to tax errors

Individuals who are employed at a large company don't have many decisions to make regarding taxes. In most cases, employers take care of ensuring necessary tax-related requirements are fulfilled and forms filed. In cases where an individual is self-employed, however, these responsibilities fall squarely on that individual's shoulders and failure to comply with tax laws can result in fines, penalties and even criminal tax charges.

Some self-employed individuals fail to pay attention to or address certain tax matters. As a result, these individuals may fail to correctly track deductions and expenditures or file important tax documents. The following are some key tax-related considerations for individuals who are self-employed.

Many self-employed individuals make the mistake of co-mingling business and personal finances and accounts. Doing so, however, can be especially problematic in the event of an IRS audit. To prevent possible errors and confusion, self-employed individuals are advised to establish separate business and personal accounts. Doing so helps keep expenditures separate and makes it easier to keep track of business-related deductions.

Individuals who are self-employed are also subject to different tax requirements. It's important, therefore, for these individuals to comply with special tax terms and file any and all necessary tax documents.

Many self-employed individuals depend upon being able to take certain tax deductions. It's important, however, to know which deductions are permitted and to only take deductions that relate to business expenditures. Acceptable business-related deductions typically include those related to a home office or vehicle as well as contributions made to retirement accounts.

As with many tax matters, those that pertain specifically to individuals who are self-employed are often complex in nature. It's advisable, therefore, to seek the advice of a tax professional and retain their services when filing taxes.

Source: WZZN13.com, "Smart Money: Tips for Self-Employed Individuals," Denise Pritchard, Oct. 17, 2013

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