Whether this is your first year or fiftieth year preparing your taxes as a self-employed individual, it’s always good to get some assistance and reminders when tax season rolls around. Read on to find what you need to know when you file!
What Is Self-Employment Tax?
The biggest thing self-employed taxpayers need to be aware of is that they need to pay self-employment tax. When you work for someone else and receive a paycheck, there are taxes withheld from each check that pay your Social Security and Medicare taxes.
If you are self-employed, however, no one makes that withholding for you. You are responsible for paying those taxes based on your income, using Schedule SE (Form 1040) to calculate the amount.
Do I Have to Pay?
Even if you have another job where you get a traditional paycheck from an employer, you still have to pay self-employment tax when you make $400 or more through a different type of work (see IRS.gov for full information and exceptions). In other words, if you have virtually any income from self-employment, you need to pay self-employment tax so that you are contributing to the federal Social Security and Medicare systems.
The tax code can get very complicated very fast when it comes to filing as a self-employed individual. For assistance with filing and understanding your tax liability, call the professionals at Taxation Solutions, Inc. today. We are your source for tax advice, preparation, and assistance in Indianapolis.