We are right in the middle of tax season. Something that seems overwhelming and unending at times. Here at KLP we are here to help you through tax season. Whether you are a small business owner or filing as an independent contractor we’ve got you covered. This week we’ve got some tips to help people that will be filing as self-employed individuals. Let us know in the comments below if you have any tips.
- Self-employment income can include pay you receive for part-time work you do out of your home. This could include income you earn in addition to your regular job.
- Self-employed individuals file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with their Form 1040.
- If you are self-employed, you generally have to pay self-employment tax as well as income tax. Self-employment tax includes Social Security and Medicare taxes. You figure this tax using Schedule SE, Self-Employment Tax.
- If you are self-employed you may have to make estimated tax payments. People typically make estimated tax payments to pay taxes on income that is not subject to withholding. If you do not make estimated tax payments, you may have to pay a penalty when you file your income tax return. The underpayment of estimated tax penalty applies if you do not pay enough taxes during the year.
- When you file your tax return, you can deduct some business expenses for the costs you paid to run your trade or business. You can deduct most business expenses in full, but some costs must be capitalized. That means you can deduct a portion of the expense each year over a period of years.
- You may deduct only the costs that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
Cited source: http://www.accountingweb.com/article/irs-offers-six-tax-tips-self-employed/221494
