Do you have any ideas on what are the self-employed taxes? To help you with that, self – employed tax is a tax rate that is deducted from the earnings of self – employed individual. Aside from that, you should also have the ideas on what are the basic things that you need to know about self – employed taxes. You can read the list below that shows what these things are and to help you to become more knowledgeable about this topic.
This is the list of the things that you need to know about self – employed taxes.
1. Self – Employed Taxes Are Composed Of Two Parts
You should know that being a self – employed person or even business, you also have to pay for your self – employed tax which is composed of two parts aside from paying your income tax. These two parts are the Medicare and Social Security that are deducted from your wages or earnings. Self – employed tax has a total of 15.3 percent because the tax rate of the Social Security was 12.4 percent while the tax rate of the Medicare was 2.9 percent that is why it comes up to that amount. You should also know that with Social Security there is an earnings limit which determines if your said earnings are included in this tax and also this earning limit can vary as the years goes by. To help you more computing these tax rates, you can use a self-employed tax calculator that is readily available.
2. Are You Qualified To Pay For It?
As what stated above, the ones who are responsible for paying for self – employed taxes are all self – employed business and employees. For you to understand it more clearly and to define it more broadly, the examples of self – employed are any businesses that are a sole proprietorship, contractors who are independent, and even a business that is within a partnership. These are the persons that can be considered as self – employed and thus, they are the ones who are qualified to pay for self – employed taxes. And with this, you can now identify and determine if you are subjected to these self – employed taxes. You can always check your status with our IR 35 tax calculator for peace of mind.
3. Self – employed Taxes Are Not Automatically Deducted
You should also know that these self – employed taxes are not automatically deducted from your earnings in a year. With this, you have to make sure to conduct an estimated payment tax before the end of the year so that you can determine the amount to be deducted. You can also use the self-employed tax calculator to help you in this situation.
With all the information stated above, you now have the ideas on what are the things that you need to know about self – employed taxes. And by knowing these ideas, you are now more familiarize and knowledgeable about the basics of this financial matters. If you want to know more about what these self – employed taxes are, you can ask the help of a tax professional.