2007-12-09 00:53:37 · 6 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
1. As a self employed, with your tax return Form 1040, you will need to file Schedule C (Form 1040): Profit and Loss from Business (Sole Proprietorship). Here you will record all your income and business related expenses to figure out your net income.
2. On your net income from self-employment (that is from schedule C) you pay 15.3% employment taxes. For this you use schedule SE (Form 1040).
3. Then on your income you will pay federal and state income tax. This will depend upon your total income, your filing status, dependents and other deductions and credits.
2007-12-09 02:22:36 · answer #1 · answered by MukatA 6 · 1⤊ 0⤋
No way to say accurately.
Your net profit will be subject to Self Employment taxes at 15.3%. That's the only absolute. As far as any income tax is concerned, that will depend upon your filing status, exemptions, deductions, other income, spousal income, etc. It could run anywhere from 0% to 35% depending upon those factors.
Just as an example, if you're in a 25% tax bracket you'll need to set aside 40% of your net profit for taxes and make quarterly estimated payments using Form 1040-ES. Add state income taxes to that if your state levies an income tax.
You can download the Form 1040-ES package from the IRS website and use the worksheets to estimate your tax liability and determine the required payments.
2007-12-09 10:18:01 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
The total of your state and federal income tax would depend on how much profit your business made so it could vary greatly.
However, many self-employed people I know pay Social Security and Medicare taxes quarterly which is required by law and that way they don't get hit with a big expense at the end of the year.
2007-12-09 09:01:22 · answer #3 · answered by WilmaF 5 · 0⤊ 0⤋
Alot -
But depending on your write offs you will probably be in good shape. You can write pretty much anything off in my business and its legal. So save all your reciepts for everything business related and keep them together for the end of the year. The IRS expects new small business to write a lot off and take losses on paper for the 1st couple years. In FL there is no state income tax which is nice but the Fed's still hammer you.
2007-12-09 08:58:35 · answer #4 · answered by Anonymous · 0⤊ 1⤋
Everyone's situation is different. Your best bet is to consult with an accountant who can guide you. For years I was a single mom working from home and I never had to put any money away for taxes because of all of the deductions I was allowed. Now the kids are grown and I have to put tax money away.
2007-12-09 08:58:29 · answer #5 · answered by Sport 3 · 1⤊ 0⤋
It depends on what kind of work you do, and how much you can write off. As a massage therapist working for myself, I save 25% of all earnings to pay taxes, but I do it quarterly.
2007-12-09 08:57:35 · answer #6 · answered by I love my baby boy! 5 · 0⤊ 0⤋