Self-employed workers in the US generally are required to file an annual return and pay an estimated quarterly tax.
Freelancers and other self-employed professionals must generally pay self-employed (SE Tax) as well as income tax. SE tax a primarily a social security and Medicare tax for individuals who work for themselves.
Medicare and Social Security for Self-Employed
The majority of people who pay into social security work for an employer- their employer deducts the amount from their paycheck. Self-employed people must independently report their earnings and pay their taxes directly to the US.
The IRS regard you as self-employed if you operate a trade, business or profession either by yourself or as a partner. Your earnings for Social Security should be reported when you file your federal income tax return.
For employed workers, 6.2% of up to $128,400 of earnings and a 1.45% Medicare tax on all earnings
For self-employed workers, 12.4% social security tax is paid on earnings up to $128,000 of net earnings and 2.9% Medicare tax on entire net earnings. The higher rate is due to the tax being taken as a combination of employer and employee tax.
For self-employed workers who have earned more than $200,000 ($250,000 as a married couple filing jointly), 0.9% more tax must be paid in Medicare.
Determining if you are subject to Self employed and income tax
Before you can determine if you are subject to self-employment tax and income tax you must figure your net profit or net loss from your business. This can be done by subtracting your business expenses from your business income; if your expenses are less than your income the difference is judged as a net profit and should be included on page 1 of form 1040. If your expenses are more than your income, the difference is judged as a net loss, and should deducted from your gross income on page 1 of your 1040 return.
The Tariffs introduced on imported goods, by President Trump back in March, have shaken the fashion world.
US expats are required to file a US federal tax return in order to disclose their worldwide income. If you’re a US expat who lives in a low-tax country and earns above the Foreign Earned Income Exclusion threshold, you are likely to owe US tax.
Donald Trump's 2017 tax reform has had and will continue to have huge implications for US expats who have an investment in non-US businesses. The two main new laws in place relating to Controlled Foreign Corporations (CFCs): any non-US business that is at least half owned by US shareholders, each of whom owns at least 10%.
Many actors are considered self-employed when it comes to filing their taxes. When filing your regular year-end 1040 income tax file, you will also be required to file a 'Schedule C' and state all the 1099s you received throughout the year. There are many unique deductions actors are allowed to take advantage of - these should be reported on the 8829 form for home office deduction. Further to this, you will liable to self-employment tax in addition to federal income tax. Paying estimated quarterly taxes may be necessary on Form 1040-ES for some, but even if this isn't mandatory (your tax liability does not exceed $1,000), it can be a great way to budget throughout the year.
As said by the late, great Benjamin Franklin "In this world nothing can be said to be certain, except death and taxes." The tax system is a long-standing, ever-changing obligation for the majority of people. Understanding why you're being taxed and what you're being taxed on will help you see the bigger picture when it comes to your finances. Think of it like going to a football match and not understanding why everyone boos a red card. Better to be in the know so you can make well-informed decisions.
Gambling winnings obtained by casual gamblers are fully taxable and must be reported as income on your tax return. Whether your success is in lotteries, casinos, horse racing, raffles or other bets, the cash winnings or value of prizes won must be declared.
Cryptocurrencies such as Bitcoin became extremely valuable and popular investments during 2017. This raised a multitude of questions about how cryptocurrency transactions should be taxed in the US. Thankfully, the IRS has offered some guidance and accountants have quickly come up to speed on the treatment of Bitcoin from a tax perspective.
With US taxes done for another year, we thought it was a good opportunity to let you know about a few changes the Internal Revenue Service (IRS) are implementing as of 2018. The new figures released are what you'll need to prepare your 2018 tax returns in 2019.
Film and television producers in New York State (NYS) are able to claim back money on their projects in the form of a refundable tax credit. The tax credit hopes to encourage creative professionals to create film and television content in NYS to help the industry thrive and keep the State's economy healthy. The incentive is available to qualified production companies that produce a variety of media outputs such as feature films, television series or television pilots. They may also be able to claim credit on post-production costs that link back with the original project.