Thursday, January 11, 2007

Taxes for self-employed individuals and independent contractors

The tax man cometh and I'm looking to find information to help us all be prepared. Browsing around the IRS website unearthed the page for self-employed individuals and independent contractors.

"If you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself as a self-employed individual. You are an independent contractor if the person for whom you perform services for has only the right to control or direct the result of your work, not what will be done, or how it will be done."

Note that the IRS says that: "Self-employed individuals, sole-proprietors, independent contractors and persons who have net earnings of $400 or more are required to pay self-employment tax by filing Schedule SE (PDF), attached to their Form 1040, U.S. Individual Income Tax Return."

and

"Estimated tax is the method used to pay (including SE tax) on income not subject to withholding. You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax, of $1,000 or more when you file your return. Use Form 1040-ES (PDF) to figure and pay the tax."

For more information on federal taxes, see the IRS website.

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