How do you pay taxes if you are self employed?

Question

I usually claim exempt for the first 6 months.

I am considered self employed. I work for an employer, but I am responsible for paying taxes.

Answer 1

This sounds pretty fishy to me. Not in terms of your tax but what your employer is doing (given what you said). The reason being is that your "employer" would then be making you pay their portion of Social Security and Medicare taxes. By law, an employer must match exactly how much each employee pays for it. Being an independent contractor (self employed) means you pay for both portions. Also, your "employer" is most likely not paying any workers comp insurance on you so if you got hurt on the job, you could be screwed.

Here's a website on guidelines to employee vs. independent contractor. The main rule to this is, who is in charge of the work? If it is the employer then you're an employee. If it is you, then you're an independent contractor.

http://www.awwa.org/Sections/Sectionlibrary/EmployeeOrNot.cfm

As for taxes, you should be paying quarterly estimates on your self employment income. The S/E tax is calculated as such:

S/E net taxable income x .9235 x .153

On top of your Federal income tax rate for your income.

If you were an employee, you would only being paying the Federal income tax rate.

Answer 2

Self-employed people are requried to withhold their own money for taxes and deposit them every quarter with the IRS. They IRS can help you and explain the rules to you. They will even send you the quarterly coupons to use. call 1-800-829-1040 or go to the IRS website and read about self employed individuals. If you don't do this you will have a huge tax bill at the end of the year because you never paid any taxes throughout the year like most people who have jobs (are taxes are taken out of our check automatically) as a self employed person that reponsiblity is yours.

Answer 3

Generally, you have to file quarterly and file an estimated tax return. When you fill out your taxes this year, you will need to fill out Schedule C to determine if you have a net profit or loss. If its a profit, then you also have to fill out Schedule SE for self-employment taxes. There are other schedules that you may need to fill out as well. Start by looking up Publication 334 on the IRS website.

Just curious, how do you claim exempt for the first 6 months if you are self-employed?

Answer 4

You should pay throughout the year; otherwise, you may have to pay a penalty if your tax bill is more than $1,000. Use the form I linked below to calculate your estimated tax payments.

I'm not aware of a tax law that allows you to be exempt for part of the year. You should consider taking your books to a professional to make sure you're in compliance.

Answer 5

The Internal Revenue Service collects your Social Security and Medicare taxes.
If you are self-employed, your Social Security tax rate is 12.4 percent and your Medicare tax is 2.9 percent on the first 97,500.
You pay this when you file your taxes. Or if your getting a refund , say you have EIC, they will subtract what you owe from your refund and send you the difference, if any is due.

Answer 6

In the beginning of your tax booklet there are articles that will explain how to file when you are self employed.

Answer 7

II would recommend anyone self employed to have an accountant do their finances. They make sure you dont screw up and lose your biz.

Answer 8

mrtaxtips what is the self employment tax? you forgot that

Answer 9

you do a schedule c that flows to your 1040a

go to irs.gov for forms and instructions