Self employed

Hi Jaladhijoshi,

1. Is it more beneficial if we file our taxes separately or file jointly? For around $12,000 self employed income?

Usually married filing jointly is the better filing status but tools like TurboTax's TaxCaster can help you decide which status is best for you by simulating various tax scenarios.  You can find TaxCaster at:   https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

2. Quarterly Tax prepayments: In 2021, we have not done quarterly tax prepays, as we did not know about it. How much penalty are applicable, if the income is about 12,000 for the year.

The IRS calculates this penalty by figuring out how much you should have paid each quarter and multiplying the difference between what you paid and what you should have paid by the effective interest rate for that period. This means you can have a penalty for one quarter, but not the others.  If you owe more than $1,000 when you calculate your taxes, you could be subject to a penalty. To avoid this you should make payments throughout the year via tax withholding from your paycheck or estimated quarterly payments, or both.

https://turbotax.intuit.com/tax-tips/irs-letters-and-notices/guide-to-irs-tax-penalties-how-to-avoid...

3. What all taxes are applicable on Self-employed income? For example, do we pay for both the employer and employee Social Security Tax and Medicare? Is 15% tax bracket is a good guess for federal tax? Any other taxes that are applicable for self employed personal?

Self-employed people are responsible for paying the same federal income taxes as everyone else.  In addition to income taxes, everyone must pay Social Security and Medicare taxes. If you are self-employed you need to make these tax payments yourself since you don’t have an employer to send it in for you.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/self-employed-federal-income-taxes/L7fmfV...

4. What other qualifying expanses that we can deduct so as to reduce taxable income? The idea of filing separately was to use standard deduction on income to reduce income tax. Is it a valid assumption?

 You can write off a wide variety of business expenses you paid during the year, including things like:

• Advertising costs
• Commissions
• Supplies
• Legal fees
• Repairs and maintenance
• office expenses 
• For more see:

https://turbotax.intuit.com/tax-tips/self-employment-taxes/reporting-self-employment-business-income...

Hope this helps

Ron G