If I am seft employed, I pay self employment tax + Income tax? What taxes do I have to pay exactly?

Question

I just receive the checks from customers and have to discount taxes myself.

What taxes do I have to pay exactly?

Answer 1

Federal income tax and self-employment tax. Depending on where you live, state and local income tax if they have one. You might also have to collect and remit sales tax, depending on whether what you are doing in your business is subject to sales tax in your state.

Answer 2

I am self-employed myself. The big difference is you are responsible for the entire 15% FICA (social security) tax. As an employee, you would pay 7.5% and the employer pays 7.5%. There isn't a "self-employement" tax.

You are supposed to record all income minus expenses and what's left is what is taxable. I recommend this book, Lower Your Taxes, Big Time. It was written by a person who actually wrote some of the tax laws.

Also, mileage is a huge deduction so keep track of every mile.

Answer 3

You pay income tax the same as a wage earner and you pay both halves of social security and medicare taxes.