When you work as a freelancer, you’re responsible for filing your own taxes. Your tax liability is based on your net self-employment earnings, which are your total income minus qualified business expenses. It’s important to keep meticulous records of your deductions throughout the year, as you can use them to lower your taxable earnings for each quarter and avoid underpayment penalties.
In addition to regular income taxes, you also owe self-employment (SE) and Medicare taxes as a sole proprietor or independent contractor. These taxes are imposed on your net self-employment income and are calculated using the same methodology as regular income tax. They’re due quarterly and are typically included in your yearly IRS Form 1040 filing. Fortunately, the self-employment tax calculator at FlyFin makes it easy to estimate your SE tax and make quarterly estimated payments.
How to calculate your taxable income
In order to calculate your net self-employment income, you’ll need to subtract all of your qualified business expenses from your total income. This is usually done on IRS Form 1040, Schedule C for individuals or partnership Schedule K for joint ventures.
To find your total net self-employment tax, you’ll then multiply this number by the SE rate, which is currently 15.3%. You’ll also need to add your Medicare tax, which is 2.9% of your net SE income. Luckily, the self-employed calculator at FlyFin can do this for you, as well as help you plan ahead for your upcoming tax filings. Калкулатор самоосигуряващо се лице с личен труд