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Are You Self Employed? Check Out These IRS Tax Tips
April 28, 2015
If you are self-employed, there are a few basic things you should know about how your income affects your federal tax return. Here are six important tips about income from self-employment:
- Include All Self-Employment Income: Self-employment income can include income you received for part-time work you did in addition to your regular job.
- Report Income Using the Correct Form: There are two forms to report self-employment income. Read Part 1 of Schedule C-EZ to find out which form you should use.
- Pay Self-Employment Tax: You may have to pay self-employment tax in addition to income tax if you made a profit. Use Schedule SE to figure what you owe. File Schedule SE with your return.
- Make Estimated Tax Payments: Use form 1040-ES to estimate how much tax you owe. Then you can make four payments throughout the year online, by phone, or by mail.
- Deduct Expenses: You can deduct ordinary expenses (that are common and accepted in your industry) and necessary expenses (that are helpful and proper for your trade or business).
- Deduct at the Right Time: In most cases, expenses are deducted in the year you paid them. However, some must be “capitalized,” or deducted over a number of years.