If you will make 12K in profits then 15% is fine ... otherwise save 25%.
If
you are new to being self employed and acting as your own bookkeeper and tax preparer
you need to get educated ....
If you have net self
employment income of $400 or more you have to file a schedule C in your
personal 1040 return for self employment business income. You may get a 1099-Misc for some of your
income but you need to report all your income. So you need to keep your
own good records. Here is some reading
material……
IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center
Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf
Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf
Home Office Expenses …
Business Use of the Home
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
https://www.irs.gov/pub/irs-pdf/p587.pdf
There is also QuickBooks Self Employment
bundle you can check out which includes one Turbo Tax Home & Business
return and will help you keep up in your bookkeeping all year along with
calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed
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 2017 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.
PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400
or more you will pay 15.3% for 2017 SE Tax on 92.35% of your net profit
in addition to your regular income tax on it. So if you have other income like
W2 income your extra business income might put you into a higher tax bracket.
You must make quarterly estimated tax payments for the current tax year (or
next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after
subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year
tax return must cover all 12 months.)
To prepare estimates
for next year, You can just type W4 in the search box at the top of your return
, click on Find. Then Click on Jump To and it will take you to the estimated
tax payments section. Say no to changing your W-4 and the next screen will
start the estimated taxes section.
OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button
