What Tax Form For Self Employed?

Tax Form for Self Employed

If you are new to working for yourself you will be thinking, ‘What tax form for self employed?’ So I have put together this short guide to help you save time and money.

When you are self-employed, paying taxes is more important than simply filing your tax return once a year, as you do when you are an employee. You must submit the appropriate self-employment tax forms and, as appropriate, pay the self-employment tax during the year. This is what you need to know about filing taxes as a self-employed person.

#Find out if you qualify as a freelancer

Under IRS rules, if one of the following three cases applies to you, then you are an independent worker:

• You trade or trade as an individual or independent contractor.
• You are a member of a company that conducts commercial or commercial activities.
• Otherwise, it is in business, including part-time business, by itself.

And, usually, if you do some of the independent light work outside your salary, you are still qualified as a self-employed person.

Check out my favourite picks-

#Compile your earnings statements

If you have performed $ 600 or more services for your client, you must obtain Form 1099-MISC from them.  When you receive all of your 1099-MISC forms, gather them to find out how much you earned for the year.

#Collect receipts and invoices

In addition to all your 1099-MISC forms, keep sales receipts, paid invoices, invoices, receipts, deposit receipts and canceled checks. Collect documents that show proof of purchases and costs, including business trips, transportation, entertainment and gifts.

#Calculate if you did enough to submit

If your net earnings from self-employment were $ 400 or more, you must file a tax return. If you have earned less than $ 400, you may have to file a return if any of the following applies to you, according to the IRS:

• Do you have any special taxes?
• You received (or your spouse, if you file a joint return) a health savings account, Archer MSA distributions or Medicare Advantage MSA.
• He had a salary of $ 108.28 or more from a church or qualified organization controlled by the church, exempt from a social welfare employer and Medicare taxes.
• Premium tax credit advance payments were made to you, your spouse or dependent who had registered in an envelope through the market.
  Payment of the health coverage tax advance was made to you, your spouse or dependent.
  You must include the amounts in income under section 965 or have a net tax liability under section 965 that you are paying in installments under section 965 (h) or deferral by election according to section 965 (I).

#Use the correct form

If you are new to filing self-employment taxes or independent contractor taxes, the self-employment tax form seems to be difficult, but most independent workers are unlikely to need these three forms:

• Form 1040: Form 1040 is required for self-employed persons due to the self-employment tax in question.
• Annex C: In Annex C, report your income or losses from a company that has worked or a profession that you held as a sole proprietor or free worker. If you accumulated costs of $ 5,000 or less, you may be entitled to the abbreviated form C-EZ Schedule.
• Annex SE: On Annex SE for Form 1040, report your Medicare Social Security and Security section. The income or losses that you have set in Annex C or Annex C-EZ are used to calculate the self-employment taxes you should have paid during the year.

#Complete and submit your self-employment taxes

You may have to make quarterly payments of your income during the year, also known as taxes. According to the IRS rules, in most cases, you will have to pay estimated federal taxes if the following items apply:

• You expect to have at least $ 1,000 in taxes when you file your return, after subtracting your tenure and credits.
• If your tax was more than zero in the previous year, you may have to pay estimated taxes for the current year.

In general, you can avoid a penalty for underpayment if you paid 90 percent or more of the tax for the current year or the entire tax shown on your statement from the previous year, whichever is less, according to the IRS. . If you do not pay your taxes, estimate.

• April 15, 2019
• June 17, 2019
• September 16, 2019
• January 15, 2020

You can also pay estimated taxes and file self-employment taxes online through the Federal Tax Payment System with your bank account information, or pay by debit or credit card through a service provider approved by the IRS.

What are the taxes I pay?

One of the benefits of working for a company is that both you and your employer pay Social Security Tax and Medicare.  The current rate of self-employment tax is 12.4 percent for Social Security, that is, old-age insurance, survivors and disabilities, and 2.9 percent for Medicare, which is your hospital insurance. These taxes are separate from your income tax. As a self-employed person, you can take a series of special deductions that will reduce your tax burden.

Deductions for own account

The advantage of paying self-employment taxes is that you can take advantage of many self-employment tax deductions to help you reduce your tax burden. Some common deductions for those who file self-employment taxes for the 2018 fiscal year include:

• Self-employed, SIMPLE plans and qualified plans: for self-employed workers who contributed to retirement plans in the fiscal year
• Part of your self-employment tax: reduce your adjusted gross income and generally represents between 50 and 57 percent of your self-employment tax

Summary

Depending on what tax form for self employed you may also qualify for other deductions or tax credits.  If you have never filed self-employment taxes before, it may be too large. So, if you are not sure if you are doing it correctly, pay enough or if you get all the deductions for which you qualify, it may be a good idea to hire an accountant or tax expert.