Estimated tax tip savings. Independent contractors wrongly treated as employees pay unnecessary taxes on business expenses. If you have $40,000 of business expenses, this error could cost you $10,400 in extra tax ($40,000 x 26 percent).

Are you a professional who works as an employee for another organization but gets paid primarily on commission?

If so, you know that you bear the financial burden of your business—your income for the year depends on how successful you are at winning over customers or working long hours.

If this situation describes you, then you’re probably an independent contractor (business owner), rather than an employee, under the common law classification system.

Yet many businesses wrongly classify independent contractors as employees. If you are an independent contractor facing this unfair treatment, you are likely losing tens of thousands of dollars in business expense deductions each year. Worse yet, you may think you’re getting deductions without realizing that they disappear in the calculation of your tax return.

But you don’t have to fall victim to this bad tax treatment. You can use a simple strategy of changing tax forms to escape this extra tax and get the ... Log in to view full article.