Great question!!
When you are sole proprietor, you will claim the income and expenses on your Form 1040 using Schedule C.
You will enter your income and expenses in the Wages and Income section under self employment.
Here are a few of my favorite links that discuss self employment.
Self employment tax Talks about social security and Medicare taxes
Self employment tax hub with calculator Helps to answer questions and figure out if you need to pay estimated taxes
Self Employment income and expenses Talks about income and expenses.
The most important part is making sure that you add all of your expenses because Self Employment taxes (social security and medicare) are taxed on the net income. Since you will most likely not have someone sending in Federal and/or State taxes from a W2 job, you will need to send in estimated taxes. The first year you might want to estimate those amounts by using the link above. In the coming years, you will look at your PDF copy of your return and estimated tax vouchers for Federal and State will be included. If you make less or more in the following year, you might want to adjust the amounts on the voucher. Payments can be made online by going to IRS.GOV and your respective state if they have state taxes.
Please give me a thumbs up if this was helpful.
Katie S.
Katherine S 63
