Seattle, WA asked in Tax Law for Washington

Q: When operating under a entertainment (dancing) license as an independent contractor, what taxes must I file?

I'm assuming I must file my personal taxes (which should cover my income and deductible expenditures) but do I need to file other business taxes? Does my time to file change?

And I just read that maybe I should have been paying as I earned; is this correct? I didn't explicitly file to be an LLC, so I assume that I'm a sole proprietor. Sorry for the mess of questions, but my research simply raised more concerns that it allayed.

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1 Lawyer Answer
Michelle D. Wynn
Michelle D. Wynn
  • Tax Law Lawyer
  • Melbourne, FL

A: It sounds like you would be classified as a Sole Proprietor for purposes of your tax filings. This means that your personal income tax return will include a Schedule C where you will declare your income from dancing and any deductible expenses associated with producing this income. This will also require you to include Schedule SE to calculate your self-employment tax (essentially the same as your payroll taxes, Medicare and Social Security, if you were working as an employee). This would be filed with your normal federal income tax return and it does not change the due dates.

I do not think you would be subject to any special filing requirements to the Washington State Department of Revenue, but you might want to call their office and ask just to be sure.

Self-employed people are supposed to pre-pay their taxes through estimated tax payments (IRS Form 1040-ES). Typically in your first year of operating a business you don't owe a penalty for not making the estimated tax payments, or you can request that the penalty be waived, but for your second year you should really try to do this. Any good tax preparer or tax preparation program should help you create the Form 1040-ES for you to use in the next year based on that year's profits.

Especially for your first year "in business", I strongly recommend seeking help from an experienced tax preparer as they can help you navigate the sometimes complicated tax rules for income and deductible expenses. Make sure you research the person ahead of time, as there are both good and bad tax preparers out there. And if they ever mention anything about adding income or expenses to your tax return that you didn't have - stop right away and leave.

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