If you work for yourself or perform any services as an independent contractor, there is a very good chance that you are required to pay self-employment tax. The IRS says that anyone who makes $400 or more as an independent contractor or through a self-owned business must pay self-employment tax. This simply means that rather than have Social Security and Medicare tax withheld by an employer, the individual is responsible for paying the amount owed.
A Tampa CPA from Reliance Consulting, LLC, can answer all of your questions about self-employment tax, including:
- Are you required to pay it?
- How much should you pay?
- Should you file estimated taxes on a quarterly basis?
- How much of the self-employment tax is deductible for purposes of your adjusted gross income?
- How much of your income is subject to self-employment tax?
In most cases, withholding tax must be paid quarterly if it is not taken out of a paycheck by an employer. A sole proprietor, partner, S corporation shareholder and/or a self-employed individual is typically required to file quarterly if you expect to owe more than $1,000 in taxes when you file your return. The timing of each quarterly payment will depend on whether your company operates on a fiscal year basis or works within the regular calendar year.
To learn more about self-employment tax, contact Reliance Consulting today to work with a Tampa CPA who has helped Florida business owners with tax planning, tax preparation, business planning and more since 1984.