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Compare self employed taxes to employee
There is a lot that you can compare for self-employed vs an employee but here are some basics about the taxes themselves -
When you have self-employment income from a Form 1099-MISC (independent contractor or general business income), you need to pay self-employment taxes on that income in addition to regular taxes. The tax rate for self-employment taxes is roughly 15% (see link below for full description of these taxes) and that does NOT include the regular income taxes on your taxable income.
When you have W2 wages, your employer will withhold these taxes from your paycheck and your employer also is responsible for paying half of the SE tax (whereas you must pay all when you have a Form 1099-MISC). This is why self-employed individuals often have a much higher tax burden than employees.
However, a self-employed person only has to pay taxes on their net profit. They have the ability to deduct business expenses against their income. An employee can sometimes deduct certain expenses but it is much more limited and harder to deduct from their income.
If there was something more specific that you had a question about, feel free to comment with further questions.
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Compare self employed taxes to employee
There is a lot that you can compare for self-employed vs an employee but here are some basics about the taxes themselves -
When you have self-employment income from a Form 1099-MISC (independent contractor or general business income), you need to pay self-employment taxes on that income in addition to regular taxes. The tax rate for self-employment taxes is roughly 15% (see link below for full description of these taxes) and that does NOT include the regular income taxes on your taxable income.
When you have W2 wages, your employer will withhold these taxes from your paycheck and your employer also is responsible for paying half of the SE tax (whereas you must pay all when you have a Form 1099-MISC). This is why self-employed individuals often have a much higher tax burden than employees.
However, a self-employed person only has to pay taxes on their net profit. They have the ability to deduct business expenses against their income. An employee can sometimes deduct certain expenses but it is much more limited and harder to deduct from their income.
If there was something more specific that you had a question about, feel free to comment with further questions.
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