What's different now that I'm self-employed? - Intuit Turbo Real Money Talk

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What's different now that I'm self-employed?

If you’ve received income from a client or a company you’ve done work for, you are considered self-employed and must pay self-employment taxes.

Here's a breakdown of the forms you may have received as a self-employed person:

1099-MISC or 1099-K

A 1099-MISC is a summary of the money you’ve earned working for a client or company. Although there are several types, the most common ones for independent contractors are the 1099-MISC and 1099-K.

Companies are required to send you a 1099-MISC if you’ve earned more than $600 in wages from them for the year.

A 1099-K is generated when you’ve earned over $20,000 or received over 200 transactions from a company. This form is sent to contractors who work for on-demand companies like Uber and Lyft.

Even if you don’t receive a 1099 form, you’re required to report your self-employed income (such as cash, personal checks, or credit/debit card payments) on your taxes.

If you’ve received a 1099 or maybe multiple ones, here are the forms you need to use:

Schedule C

This is the form you’ll use to calculate your profit or loss. Subtract your related business expenses (like mileage, health insurance premiums, etc.) from the earnings reported on your 1099. This is your net profit (or loss), which carries over to Line 12, Business income or loss on Schedule 1 of Form 1040.

Schedule SE

On this schedule, you’ll report the profit (or loss) that you calculated on the Schedule C and use it to measure how much self-employment tax you owe. When your net income is $400 or more, your self-employment taxes are 15.3% with 12.4% for Social Security and 2.9% for Medicare. You’ll find this amount on Line 57, Self-employment tax on Schedule 4 of Form 1040.

Form 1040

This form is used to report both W-2 and 1099 income to determine how much in taxes you’ll owe to the IRS on April 15th.

Deduction for self-employment tax

This deduction is half the amount you pay in self-employment tax from Schedule SE. It lowers your adjusted gross income. It’s found on Line 27, Deductible part of self-employment tax on Schedule 1 of Form 1040.

Estimated tax payments

Because taxes aren’t withheld from your self-employment income, you can choose to make quarterly estimated tax payments throughout the year.

If you’ve been paying quarterly estimated taxes, you’ll only owe any outstanding amount you haven’t paid in previous quarters. Otherwise, you’ll pay what you owe when you file your return.

If you’ve overpaid in prior quarterly tax payments, then you’ll get money back. If you’d like to avoid having to pay all your taxes at once, we’ll calculate your estimated tax payments for next year.

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