You are required by the Internal Revenue Service to have withheld from you earnings FICA and Medicare taxes, as a regular employee of a company. FICA is also known as the Social Security tax. The Self Employment Tax is similar to these aforementioned taxes except that they are for self employed individuals and are imposed on self employed earnings. The current rate for self employment tax is 15 dot 3percentage. You can find some more information about this stuff on this website. Ok, you have determined that you are as a matter of fact considered self employed by the IRS.
How to pay the tax is the next thing you must know.
Including the self employment tax, and you have no taxes withheld, you must make estimated tax payments, So if your expected tax liability is more than $ 1000.
You have to pay the tax as you earn your income in the course of the year, since income tax is a pay as you go tax. As a result, the following forms are a few that should be needed when dealing with the self employment tax. Figure your self employment net earnings. Schedule SE Self Employment Tax. Lots of information can be found on the web. Some can file the shortened version of Schedule SE. Usually, short Schedule SE. Schedule C Profit or Loss from Business.
Form 8829 Expenses for Business Use of Your Home.