How is self-employed taxes calculated?

Forum|Forum|2 years ago
August 30, 2023
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My business is still at a loss after three years. All profits from labor and markup on parts goes to overhead and child support. We have no life or fun and how much am I supposed to set aside so I don’t keep getting screwed over by taxes. What am I doing wrong?

Ask the Experts - Self-Employed - Aug 2023

carmen_t

Employee Tax Expert

Hello and thank you for your question. Self employment tax is calculated on business net income (gross income less cost of goods sold less expenses) As a side note Gross Income is total income. Once Net Income is calculated then that amount is used to calculate self employment tax. SE tax is 15.3% (medicare and social security) and computed on Schedule SE. I have inserted a link below from the IRS that has more detail and instructions plus the forms to review. In addition, I will add links to a Tax Estimator and 1040ES for estimated tax payments. I hope this answered your question and have a wonderful day.

IRS SE Tax

Tax Estimator

IRS 1040ES