Does self employed mean the same as owning a business if not whats the difference
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New Member

Does self employed mean the same as owning a business if not whats the difference

 
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Level 15

Does self employed mean the same as owning a business if not whats the difference

Yes.  When you are self employed you do have a business.  YOU are the business even if you don't have an official "business" set up.
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Level 15

Does self employed mean the same as owning a business if not whats the difference

Do you need more info on Self Employment?  What version are you using?

First of all,  If you buy the Desktop CD or Download Software any version will handle it but you will get more help in Home & Business.

For the Online versions...........You can use Deluxe or Premier if you have very limited expenses such as supplies less than $100.   If you have more complex situations and/or higher expense amounts you will have to upgrade to the Home and Business product to fill out the full schedule C.  I can tell you how to enter it the lower versions.

Most people are surprised when they get their first 1099Misc.  The IRS considers anything in box 7 to be self employment business income.   Independent contractor is the same as self employed, sole proprietor,  freelance, etc.  You are self employed and have to fill out schedule C for business income.  You don't have to have an official business set up.  You and the business are one and the same.  YOU are the business.

You use your own name and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all  income is At Risk.  After you put in your income and expenses  if your net profit is $400 or more you will pay 15.3%  Self Employment tax in addition to your regular income tax.  The Schedule SE will be automatically filled out for it.

After it asks if you received any 1099Misc it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

If you have Self Employment income you have to file a schedule C in your personal 1040 return. You may get a 1099Misc for some of your income but you need  report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
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