Tax Forms for Filing Self Employed Taxes and How to use Self Employed Tax Calculator
Are you one of the many people across the country who has recently left full-time employment for self employment or taken on a side-job in the past year? Whether your new self employment is now your only source of income or an added boost to your paychecks, there are a few things that may look a bit different when you file your taxes. So, what tax forms and tax regulations should every self employed taxpayer be aware of?
First off when filing self employed tax, who does the IRS consider self employed?
According to the IRS, there are three broad categories of people consider self employed:
- if you work in a trade or business as a sole proprietor or an independent contractor
- when you are a member of a partnership that works in a trade or business
- if you are in business for yourself. (Both full-time and part-time businesses includes here)
When does a self employed person need to file a tax return?
If your net earnings from your self employment are $400 or more, you will need to file a federal income tax return. It is also a good idea to file a return if you are eligible for any of the following credits, including:
- Earned Income Credit,
- Refundable Child Tax Credit or Additional Child Tax Credit,
- American Opportunity Credit,
- Credit for Federal Tax on Fuels,
- Premium Tax Credit,
- Health Coverage Tax Credit,
- Recovery Rebate Credit,
- Credits for Sick and Family Leave, or
- Child and Dependent Care Credit.
What are my self employed taxes obligation?
When you’re self employed, the primary tax obligations are filing an annual tax return and making estimated tax payments to the IRS quarterly. The IRS expects self employed individuals to pay estimated tax payments quarterly if they expect to owe $1,000 or more in taxes. You need to file an annual tax return when your net earnings from your self employment are $400 or more.
When self employed, you are typically responsible for self employment-specific taxes in addition to income tax. These self employment-specific taxes are social security and medicare tax. Which can withheld from your wages if you were an employee. Overall the tax rate is 15.3%: 12.4% for social security and 2.9% for medicare.
Consider using a self employed tax calculator to get a sense of your tax bill and determine how these regulations relate to your situation. Form 1040-ES, Estimated Tax for Individuals, has a worksheet to help determine your obligations. You can also refer to the IRS’s Pub. 334, Tax Guide for Small Business (For Individuals Who use Schedule C) for further details on figuring your net profit/loss and resulting tax obligations. These and all other tax forms and publications are available as a PDF on the IRS website.
If over the course of the year, your total self employment business expenses are more than your self employment earned income, you aren’t making a profit, and you won’t owe taxes on your self employment income.
What are quarterly taxes, and when are quarterly taxes due?
Quarterly taxes are payments of your estimated tax liability that you pay to the IRS spread out through the year. It is equivalent to withheld taxes on a paycheck for jobs where you receive a W-2. You can use Form 104-ES, Estimated Tax for Individuals, to figure your estimated tax, which will take into account your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.
Quarterly tax payments to the IRS are due as follows:
- For January 1 to March 31: April 15
- In case for April 1 to May 31: June 15
- For June 1 to August 31: September 15
- and September 1 to December 31: January 15 of the following year
The payment due dates move to the next business day when the designated date falls on a Saturday, Sunday, or legal holiday.
What special tax forms should I be aware of when self employed?
- Tax Form 1099-NEC and 1099-MISC: Since 2020, Tax Form 1099-NEC has been used to report independent contract income (previously included on Tax Form 1099-MISC). You should receive a 1099-NEC form from clients who paid you $600 or more in a year.
- Tax Form 1099-K: You may receive a Tax Form 1099-K from payment processors, such as PayPal, Venmo, or other third-party networks. The threshold for Form 1099-K filing requirements changes from 2022, so you may begin receiving them when you didn’t before starting in 2023.
- Tax Form 1040-ES: This form is used to figure out and pay your estimated tax. It includes a worksheet to calculate your estimated tax obligations.
- Tax Form W-9: If you are paid $600 or more by a client, they may ask you to complete a Tax Form W-9, which they will use to prepare your 1099 form.
Need a self employed tax calculator?
Make use of the comprehensive free tax calculators on the PriorTax.com website to get a sense of the tax refund or outstanding tax bill you can expect. If you were self employed in 2021, 2020, 2019 or 2018, the sections most relevant as someone who was self employed using the tax calculator would be the “Business” section under “Income” and the “Payments” section under “Deductions and Credits.”
What information do you need as someone who was self employed when using the tax calculator?
If you were self employed for part or all of tax year 2021, 2020, 2019, or 2018, when using the Tax Calculator on Free Tax Calculator at PriorTax. Go to the most relevant sections to your self employment would be the “Business” section under “Income” and the “Deductions and Credits” section under “Payments.”
The “Business” section is where you will enter any income you earned from self employment and your own business(es). In this section, you can enter your net business income. Your gross income from self employment minus your business expenses will be the number you use here. You are also able to note in this section if you have an income or a loss from K-1 tax forms. As a member of a partnership.
The “Payments” section is where you will enter any pre-payment of estimated federal or state income taxes. This includes payments for social security and Medicare taxes and income tax. Which you may have made when filing quarterly estimated tax payments to the IRS.
Looking for more tax tips and information to help you this tax season? Keep PriorTax.com bookmarked to keep up to date with current and prior-year tax news on our Tax News Blog and learn more about our full range of tax filing services.
