Self-Employed? Know This for Your 2017 Taxestax tips | November 23, 2017 | By Susannah McQuitty
Yep, it’s getting close to tax time again, which means it’s time for self-employed hustlers like yourself to pull together all that business info from the past year. Here’s a quick refresh on taxes for freelancers, contractors, and solopreneurs.
How much can I make without having to pay self-employment taxes?
If you make more than $400 of profit (profit = income – expenses) during the year, then you’ll owe self-employment taxes on that income.
Remember, if you earn less than $400 during the year, you still have to report that income on your tax return. You just won’t have to pay the additional self-employment tax.
What tax paperwork should I get from my clients?
You want to keep an eye out for a Form 1099-MISC from each client who paid you more than $600 during the year. If you sent a W-9 when you were hired, you’re pretty likely to be getting a Form 1099-MISC in the mail in January.
A 1099-MISC reports exactly how much you were paid. Your client will send a copy to you and the IRS so that everyone’s on the same page.
Didn’t get a 1099-MISC? Don’t worry: Just use your own records (bank statements, receipts, emails, etc.) to report your income. And be sure to report all of it, whether the client paid you $100 or $10,000.
How can I save money on self-employment taxes?
Now to the good stuff, right? As a self-employed taxpayer, you can deduct any expenses that were either necessary to your business or ordinary in your line of work.
You might be surprised at the sorts of expenses you can deduct, like coffee with a client or your work station at home. We lay it out for you in our blog post on freelancer deductions, so check it out for some sweet self-employment savings.
Where on earth do I report all this tax info?
Meet the Schedule C, your right-hand man for freelancer taxes. This form is where you’ll report everything related to your business, from income to deductible expenses. In addition, you’ll use Schedule SE to figure how much self-employment tax you owe and how much of that tax can be deducted.
Sound a bit overwhelming? Don’t worry. When you file with 1040.com, we’ll help you through these forms to keep the process simple. Our interview-based application will ask some questions about your business and expenses, then we’ll use your answers to do the leg work and complete the form for your tax return.
Do you have any other questions about self-employment taxes? Let us know below!