How is being self-employed different from being an employee?
It's different in a couple of ways.
When You’re an Employee:
You get a W-2
Federal, state, Social Security and Medicare taxes are withheld from your paycheck each payday
You pay half of your Social Security and Medicare taxes, and your employer pays the other half
When You’re Self-Employed:
You may get a 1099-MISC
There's no employer to withhold taxes from your pay
That means federal, state, Social Security and Medicare taxes aren’t withheld from your pay
Instead, you make your own quarterly estimated tax payments
You pay all your Social Security and Medicare taxes, but you qualify you for a self-employment tax deduction
You can deduct expenses related to your work, things like mileage, home office expense, supplies, etc
After you enter your 1099-MISC, we’ll review your work related expenses including the deductible part of your self-employment tax. We’ll also help you calculate your estimated tax payments for next year so you can avoid having to pay all your taxes at once.