Recording wages for taxes?

Question

I have started working at home processing orders through a work-at-home business. The business pays me through paypal, but does not withhold taxes, so I have to report my own wages on my tax statement this year. How do I do this?

Answer 1

You'll use 1040 schedule C or schedule C-EZ to report your income and expenses. The total will then be transferred to your 1040 to calculate your income tax.

You'll also need schedule SE to calculate your self-employment tax, which is social security and medicare. That will be 15.3% of your net earnings from your business, and will be added to your income tax on your 1040.

If you're making very much from the business, you should be filing estimated tax forms quarterly - that's a 1040-ES.

All of the forms you need can be downloaded from irs.gov, or call the IRS and they'll send them to you.

Good luck.

Answer 2

This is self-employment income, and you would report this on Schedule C. Note that since you are not an employee, you are also subject to self-employment tax, that is social security and medicare, but you will be liable for both the employer and employee portion.

At least you will be able to reduce the amount taxed by offsetting it with expenses.

Answer 3

I suggest you go to www.IRS.com as they have all the information you'll need to include every form imaginable and you can count on this site to give you all the right answers to all of your tax questions. And you can also fill any of these forms out on line and print them out. I do this every year.