Self-Employment Taxes Q&A
Q: Who is considered to be self-employed?
A: Anyone who (1) engages in a business or trade to earn his or her livelihood or a profit, and (2) has not created a corporation to do so. The term includes:
- farmers;
- independent contractors (including lawyers, construction contractors and subcontractors, many computer programmers);
- some members of the clergy and Christian Science practitioners, members of religious orders who have not taken a vow of poverty;
- some members of fishing boat crews;
- sole proprietorships;
- some newspaper carriers; and
- some public officials.
Q: May I work full-time for somebody and still be self-employed?
A: Yes. Self-employment may include paid work outside of your regular job, and some part-time work you do at home.
Q: What forms will I need?
A: Pick up these tax forms and instructions, or visit the IRS website:
- Form 1040 (you can't use Forms 1040-EZ or 1040A)
- Schedule C -- Profit or Loss from Business (Sole Proprietorship)
- Schedule C-EZ -- Net Profit from Business (Sole Proprietorship)
- Schedule SE -- Self-Employment Tax
- Form 8829 -- Expenses for Business Use of Your Home (if you work at home)
Q: How do I pay my income taxes when I don't have an employer to withhold them?
A: You should probably start estimating your taxes and putting the money aside. See Form 1040-ES and its instructions for estimating payments to figure out how much you should be setting aside. A worksheet inside the instructions can help you. This is a good thing to talk to a tax professional about, because it will require some planning for the future. Also, if you don't estimate properly, you may be liable for penalties.
Q: When do I pay estimated taxes?
A: Generally, you pay estimated taxes four times a year, beginning on April 15, then payments must be made on (or the first business day after) June 15, September 15 and January 15 of the following year.
Page 1 of 4
Next Page
