Caveat right up front: I'm not a CPA and I don't give tax advice. But this is a recurring issue both with our vendors and for some of our clients, so I thought it might be for you, too.
If you're an independent contractor, that means the companies and people for whom you provide services don't withhold employment taxes from your check. "Yay! More for me!", I hear you cry. Not so fast, Mr/Ms Entrepreneur! You see, if you receive more than about $600 per year from anybody for services performed, they have to issue you a Form 1099. They also file that 1099 with their own taxes. That means the IRS will know you got paid, and that worthy agency will want to know if you paid taxes on that income.
It's not too late this year to fill out a Form W-9 and give it to each entity for whom you provide services, and then put away enough from the rest of your income from that entity to cover your tax bracket. That way, when that 1099 comes in next January or so, you won't be unpleasantly surprised by the the amount you'll owe the IRS on April 15th. After all, borrowing money on your credit card to pay your taxes just stinks.
As noted (and as always), the above is not legal or tax advice, and if you have questions or concerns, you should contact an attorney and/or a CPA to discuss your particular situation.
We handle a lot of elder law cases, and we often have clients worry that "Medicaid will put a lien on my house/take my house/sell my house" in order to recoup amounts paid out by Medicaid for assistance with assisted living or nursing home services.