If you are an independent contractor or drive your own business, there are some basic things you should know when it comes to their federal taxes. Here are six tips on receipts from self-employment:
Self-Employment Tax Tips
- Income from self-employment may include receiving pay for work part time. This is in addition to your regular income job.
- You must file a Schedule C , Profit or Loss from Business, or Schedule C-EZ , Net Profit from Business (in English) with your Form 1040.
- Usually you have to pay taxes self-employed as well as the federal income tax if it had. The self-employment taxes include Social Security taxes and Medicare. Use Schedule SE , Self-Employment Tax Account to calculate the tax. Be sure to attach this form to your return.
- If self-employed have to make payments of estimated tax . People often make these payments on income that is not subject to withholding. You will pay a penalty if you do not pay enough tax during the year.
- You can deduct certain expenses for business costs to execute your trade or business. You can deduct most business expenses in full, but some of the costs should be capitalized.This means you can deduct a portion of the cost each year over a period of years.
- You can deduct only those expenses that are 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.
IRS Small Business Tax Info Center
Visit IRS.gov the Tax Center for Small Business and Self-employed ( Small Business and Self-Employed Tax Center ,) for all your tax needs.
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