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What are the estimated tax and tax return filing requirements for taxpayers earning income as an independent contractor and should I incorporate or establish a Limited Liability Company for that independent contractor activity?

Independent Contractor
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William Keats
As an independent contractor (IC), a tax return must be filed (using Schedule C) if your net profit is over $400. You will also be required to pay FICA and Medicare taxes on your net profit. Currently, that rate is 15.3%. If tax liability is over $1000. or is anticipated to be that or more, you should be making quarterly estimated tax payments.
Establishing an LLC as a sole proprietor may reduce your liability should you be sued, but it does not save taxes. If you set up an S-Corp you will be required to take a salary if the company is profitable. (Some start-up companies may not have enough capital to take salaries or hire employees.). Any profit is carried over from your corporation to your personal return on the K-1.
If you go the S-Corp route, be sure to get liability insurance.
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