Click on the question below to find the answer!
- What are my exact tax obligations in my job at Hands N Paws?
- How do I actually file my taxes correctly?
- What should I do with my Form 1099 once I receive it?
- What’s your best advice for effectively handling my taxes?
- What are tax write-offs and how do I use them?
- What are common tax write-offs for dog walkers & pet sitters?
- Do I have to take advantage of tax write-offs?
- If I’m using write-offs, should I keep receipts for all my work-related purchases?
- What’s the difference between a contractor and an employee in tax terms?
- I need additional help.
What are my exact tax obligations in my job at Hands N Paws?
If you are a pet care technician at Hands N Paws, you are a classified independent contractor. As an independent contractor, you are responsible for managing your own tax obligations, including paying self-employment taxes (current rate: 15.3%) that cover Social Security and Medicare. These taxes are typically filed using IRS Form 1099-NEC. Hands N Paws will email your Form 1099 to you at the end of the tax year. At that point, you can file your taxes using a platform of your choice. You may also choose to consult with an accountant for professional guidance and assistance. You can learn more about taxes for independent contractors here.
How do I actually file my taxes correctly?
Once you receive your 1099 at the end of the tax year, you are pretty much ready to file your taxes. If you decided to track expenses/write-offs throughout the year, you should also collect all records of your expenses at this time. Once you have everything handy, choose a platform such as TurboTax, H&R Block, or another online tax software. Alternatively, you may choose to hire an accountant for professional assistance. Follow the steps provided by your chosen tax filing platform or accountant, inputting your income information from the 1099 and listing your deductible expenses. Finally, review all the information to ensure it is accurate and complete before submitting your tax return.
What should I do with my Form 1099 once I receive it?
Once you receive your 1099 via email, it’s best to save it onto your computer and store it in a secure folder for easy access and record-keeping. If you receive a physical copy in the mail, ensure you store it safely as well. You will use this form to file your taxes. For more information on how to file, click here. For details on your tax obligations, click here.
What’s your best advice for effectively handling my taxes?
Our best advice is to take advantage of tax write-offs (learn more below); this is one of the benefits of being a contractor! Utilizing write-offs can help reduce the amount you owe when it comes time to file your taxes. At the very least, make sure to track your car expenses, as they are typically the largest expense in this line of work. To learn more about the rules and regulations regarding car-expense write-offs, click here.
Also, we highly recommend using Keeper for all things taxes. Keeper allows you to track write-offs automatically, consult with a dedicated accountant whenever you need, and much more. If interested, Keeper gives all newbies a FREE 7-day trial period!
Our final piece of advice, according to Keeper, is that if your estimated tax bill is over $1000 (access a regular tax calculator here), you should file quarterly taxes on the following dates. Failing to file quarterly taxes for larger incomes can result in penalties, so it’s important to stay on top of these deadlines!
- 🌷 April 15th (First Quarter)
- 🏖️ June 15th (Second Quarter)
- 🍁 September 15th (Third Quarter)
- 🌲 January 15th of the following year (Fourth Quarter)
What are tax write-offs and how do I use them?
Tax write-offs, also known as tax deductions, are expenses that you can subtract from your total taxable income, thereby reducing the amount of income that is subject to tax. Should you utilize tax write-offs, you can significantly lower your taxable income and, consequently, your tax liability.
If you are using tax write-offs, it is highly encouraged to stay organized with your work expenses. Failing to track your expenses can result in unnecessary financial loss at the end of the tax year when you file. Additionally, staying organized will save you from wasting time scrambling to find or remember all your expenses when it’s time to file your taxes.
The easiest and most automated way to track your expenses is by using a recommended app called Keeper. If you have any questions or concerns about taxes, Keeper is an excellent resource to assist you. You can even consult with an accountant for free on their website!
What are common tax write-offs for dog walkers & pet sitters?
Here is a list of common deductible expenses for dog walkers and pet sitters:
- 🚗 Gas & other car expenses (oil changes, maintenance, vehicle depreciation, lease payments, etc.)
- 🐾 Dog walking equipment (fanny pack, water bottle, etc.)
- 👟 Tennis shoes for dog walking
- 💩 Poop bags (and dispensers!)
- 👕 Work shirts & apparel
- ☔️ Rain gear
- ❄️ Winter gear
- ☀️ Summer gear
- 🎾 Dog toys
- 🦴 Dog treats
- 🦮 Leashes & harnesses
- 🚲 Bike and/or public transport expenses
- 📲 Phone bill
NOTE: If you are tracking/writing off actual car expenses, you cannot write off mileage as well. It’s one or the other! Click here to learn more.
Do I have to take advantage of tax write-offs?
No, taking advantage of tax write-offs is completely optional. However, it is highly recommended because it can significantly reduce the amount you owe in taxes at the end of the year. One of the biggest and most common expenses for our contractors is related to your car. It’s important to note that for contractors, you have to choose between tracking your actual car expenses (such as gas, maintenance, and insurance) or tracking your mileage. You cannot do both. Click here to learn more.
If I’m using write-offs, should I keep receipts for all my work-related purchases?
Yes, it is highly recommended to save receipts for all business-related purchases. Keeping detailed records of your expenses is crucial for several reasons. First, it helps you accurately track and categorize your business expenses throughout the year, making the tax filing process smoother and more efficient. Second, in the event of an audit, the IRS will require documentation to verify your deductions. Receipts serve as proof of your expenditures and help substantiate the amounts you claim on your tax return. It’s a good practice to organize and store your receipts in a safe place, either digitally or physically, so they are easily accessible when needed. This ensures you can take full advantage of all available tax deductions and remain compliant with tax regulations.
What’s the difference between a contractor and an employee in tax terms?
Being an independent contractor (as you are at Hands N Paws) means you are responsible for managing your own taxes, as no taxes are withheld from your earnings. Simply put, the amount displayed in Precise Petcare > Payroll is the exact amount you earn via direct deposit. Conversely, if you were classified as an “employee” at Hands N Paws, a portion of your earnings would be withheld for taxes each time you receive a paycheck.
Additionally, the tax forms you receive at the end of the tax year are different. As a contractor, you will receive a Form 1099, which reports your total earnings without any deductions for taxes. Employees, on the other hand, receive a Form W-2, which shows their earnings along with the amounts withheld for federal, state, and other payroll taxes. This distinction affects how you file your taxes and the types of deductions you can claim. As a contractor, you can deduct business expenses directly, which can lower your taxable income.
I need additional help.
You can seek additional help by asking an accountant or contacting our accounting company (they are also equipped to answer all tax-related questions). You may also find answers in Compensation FAQs.
Hands N Paws’ Accounting Company: JC Tax Pros
- Phone: 614-453-5902 (ask for Joe!)
- Email: support@jctaxpros.com