When it comes to filing taxes as a self-employed person, there are a few basic guidelines you should keep in mind.
- First and foremost, you will need to track your income and expenses throughout the year. This will help you accurately report your taxable income and claim any deductions or credits you may be eligible for.
- In addition, you will need to file a Schedule C with your tax return. This form is used to report business income and expenses. It is important to note that you cannot use Schedule C if you only earned income from wages or salary.
- Finally, you may also need to file a Schedule SE with your tax return. This form is used to calculate your self-employment tax. Self-employment tax is the equivalent of the traditional income tax that you would pay on your salary. In addition to self-employment tax, you may also owe household employment taxes if you have any employees. This is a form of tax that usually only applies to domestic workers and farm workers who work for an employer who pays them more than $2100 in a calendar year.
If you need help filing your taxes as a self-employed person, it may be beneficial to hire a professional accountant or look into using a free online option such as TurboTax Self Employed.
If you work for yourself, there are a few more tax rules and forms to keep track of. But many of these laws were created with the self-employed taxpayer in mind and so they actually help alleviate some of the burden associated with your job.
According to Aron Govil you can deduct any business-related expenses on Schedule C or on Schedule An if they exceed 2% of your adjusted gross income (AGI). If you do not itemize deductions, you can still write off $400 worth of expenses. Keep all receipts and/or canceled checks related to your deductible expenses to back up what you claim come tax time.
As a self-employed person, if you have employees it is required that you make quarterly payments for Social Security and Medicare taxes (the self-employed pay both the employee and employer share). This usually amounts to about 15.3% of your income. You will also need to file a Schedule SE with your tax return to report your earnings and calculate your self-employment tax.
There are a few other things you should keep in mind come tax time if you work for yourself. For example, you may be able to claim the home office deduction if you use part of your house exclusively for business purposes. And, if you sell any products or services, you may be able to claim the income earned from those sales on Schedule C.
Filing your taxes as a self-employed individual can seem daunting, but there are many tax breaks available specifically for those in this situation.
To make things easier, here is a quick overview of some of the most important things to keep in mind when filing your taxes as a self-employed person.
- First and foremost, you will need to track your income and expenses throughout the year. This will help you accurately report your taxable income and claim any deductions or credits you may be eligible for. In addition, you will need to file a Schedule C with your tax return. This form is used to report business income and expenses. It is important to note that you cannot use Schedule C if you only earned income from wages or salary.
- Finally, you may also need to file a Schedule SE with your tax return. This form is used to calculate your self-employment tax. Self-employment tax is the equivalent of the traditional income tax that you would pay on your salary. In addition to self-employment tax, you may also owe household employment taxes if you have any employees. This is a form of tax that usually only applies to domestic workers and farm workers who work for an employer who pays them more than $2100 in a calendar year. If you need help filing your taxes as a self-employed person, it may be beneficial to hire a professional accountant or look into using a free online option such as TurboTax Self Employed.
Conclusion by Aron Govil:
The bottom line is that there are many deductions and credits available to the self-employed taxpayer. So, before filing your taxes, be sure to familiarize yourself with the specific rules that apply to you. Working with a professional accountant can also be helpful in ensuring that you claim all of the deductions and credits to which you are entitled.
