Self Employed Income Tax - What You Should Know
Congratulations on your decision to become self employed.
You have joined the ranks of many wanting to take control of their financial future.
If this is a fairly new development for you, there are probably many things you are still learning about being in business for yourself.
Additionally, there are many new laws, regulations and tax updates that can impact you as an entrepreneur.
One of those new updates is the recently implemented self employed income tax.
Below you will find a description of the new tax, whether you need to pay it and how it can affect you as a business owner.
Self employed income tax is comparable to the Medicare and Social Security taxes that are withheld from one's paycheck when working for an employer.
If you netted at least $400 during a calendar year, or earned just over $100 through employment with a church, you will be required to pay this new tax.
Currently the tax rate is 15.
3%, where 12.
4% will cover social security and the remainder will cover Medicare.
Since chances are that you don't receive a a regular pay check every other week as a self employed individual, you will have to make an estimate of what you owe.
If you are only self employed on a part time basis, you will still be required to pay this new tax as long as you have earned the minimum amount.
self employed income tax.
If you are not automatically deducting this tax from your earnings, this can affect you adversely and you may find that you have to pay a lump sum, which you may or may not have.
The more prepared you are in keeping track of your earnings and taxes owed, the better your chances are that you won't be overwhelmed by a huge payment during tax time.
When paying self employed income tax, your best bet is to set up a separate account so that you are prepared for whatever you may owe.
Although this is a fairly new tax, it is one that is being strictly enforced, so make sure that you take the proper steps to ensure that you have the resources to pay this income tax and that you're not scrambling last minute to get funds together.
Being self employed means that you have to more responsible than you ever were as an employee.
By responsibly putting money away for this tax, you will save yourself a lot of time and aggravation in the end.
You have joined the ranks of many wanting to take control of their financial future.
If this is a fairly new development for you, there are probably many things you are still learning about being in business for yourself.
Additionally, there are many new laws, regulations and tax updates that can impact you as an entrepreneur.
One of those new updates is the recently implemented self employed income tax.
Below you will find a description of the new tax, whether you need to pay it and how it can affect you as a business owner.
Self employed income tax is comparable to the Medicare and Social Security taxes that are withheld from one's paycheck when working for an employer.
If you netted at least $400 during a calendar year, or earned just over $100 through employment with a church, you will be required to pay this new tax.
Currently the tax rate is 15.
3%, where 12.
4% will cover social security and the remainder will cover Medicare.
Since chances are that you don't receive a a regular pay check every other week as a self employed individual, you will have to make an estimate of what you owe.
If you are only self employed on a part time basis, you will still be required to pay this new tax as long as you have earned the minimum amount.
self employed income tax.
If you are not automatically deducting this tax from your earnings, this can affect you adversely and you may find that you have to pay a lump sum, which you may or may not have.
The more prepared you are in keeping track of your earnings and taxes owed, the better your chances are that you won't be overwhelmed by a huge payment during tax time.
When paying self employed income tax, your best bet is to set up a separate account so that you are prepared for whatever you may owe.
Although this is a fairly new tax, it is one that is being strictly enforced, so make sure that you take the proper steps to ensure that you have the resources to pay this income tax and that you're not scrambling last minute to get funds together.
Being self employed means that you have to more responsible than you ever were as an employee.
By responsibly putting money away for this tax, you will save yourself a lot of time and aggravation in the end.