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One of the challenges that independent contractors who work for themselves have is to file taxes accurately. Typically an independent contractor may be required to file taxes using a 1099-MISC form. In other cases, they file taxes using a 1099-K form. The bottom line is however, is that if you are earning an income as an independent contractor, you will have to file taxes.

However, it can become confusing to classify the kind of work that you do. Tax filing for an independent contractor may not be as cut and dry, as filing for taxes when you are an employee of a company. For instance, how do you classify the kind of work that you do? Is it a business, or are you engaged in a hobby, that occasionally earns you an income?

Filing properly is very important because it determines the kind of tax that you pay, and the exemptions and deductions that are deducted. For example, if you earn an income via a hobby that you are currently engaged in, you may be able to use deductions to offset the income, but those deductions cannot be higher than your income, because there is no concept of suffering a loss in a hobby. Things can be dramatically different when you're engaged in a business, however. Businesses do involve profit and loss, and in fact, in the early stages of a business, it's fairly normal to not be making any profit at all.

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Gamblers have been eligible to pay taxes on their winnings for years, and must pay taxes on each dollar that they win on all kinds of gambling. That includes not just slot machines in casinos, but also winnings on sports bets.

 

At a slot machine, only winnings above $1200 must be reported to the IRS. However, the Internal Revenue Service has admitted that it is toying with the idea of lowering that limit to $600. Predictably, that has generated outrage in the gambling community. It's not just gamblers who are opposing those proposals. The casino industry is also opposing that lowered threshold for reporting earnings at slot machines.

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According to a highly critical government report on the Internal Revenue Service recently, employees who were caught cheating on tax laws are very unlikely to be fired. That is in spite of the fact that a federal law expressly requires the head of the Internal Revenue Service to fire cheating employees. The report finds however, that the agency fired only approximately 39% employees who were found to violate tax laws.

The report couldn't come at a worse time for the Internal Revenue Service. The agency is already battling not just funding crunches, and staffing shortages, but also a number of questions about its operations. Public confidence in the agency is at an all-time low, and the agency's reputation is damaged.

The report says that the Internal Revenue Service looked away when many IRS employees violated tax laws willfully. The kind of cheating reported included missing tax deadlines, overstating expenses, and claiming tax credits for first-time homebuyers, even without buying a house. According to the report, over the past decade, the Internal Revenue Service has caught 1,580 of its employees in violation of tax laws. However, in 61% of the cases, the employee was simply given access to counseling sessions, or was reprimanded for the offense. In other cases, they were suspended. In the remaining cases, they were fired.

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Posted on in Taxation Law

The Internal Revenue Service has proposed penalties and taxes worth more than $1 billion on Caterpillar. That announcement came after the Internal Revenue Service went through the company's returns from between 2007 and 2009.

The Internal Revenue Service is specifically looking at profits from a Caterpillar subsidiary in Switzerland. The subsidiary is also currently the subject of an investigation by the Securities and Exchange Commission.

In 1999, Caterpillar via a process of restructuring shifted most of its profits to this subsidiary, and gave it a license to distribute the company's replacement parts for its excavators, and other equipment outside of the United States. According to a Senate investigation, by doing so, Caterpillar managed to save as much as $2.4 billion in taxes between 2000 and 2013. The Senate investigation was specifically looking at how this is tax structure for the Swiss subsidiary helped the company to save as much as $300 million in taxes every year.

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Tax filing season is upon us, and some persons will be very sensible, and file their taxes earlier than the rest. There are definitely advantages to filing taxes before everyone else does.

When you file your taxes quickly, you will be first in line for your refund. Many people anticipate refunds, when tax season rolls around, and for these people, the quicker they file their taxes, the quicker they are eligible for a refund.

Filing your taxes early also reduces the risk that you will be victimized by identity theft. This is a very serious crime, and there are far too many cases involving taxpayers who had their identities stolen and suffered severe financial losses as a result. In fact, in 2014, the Internal Revenue Service actually included identity fraud or identity theft, as one of the many scams that taxpayers in the United States need to avoid. In many of the most popular schemes, fraudsters steal personal information, and file fake income tax returns.

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