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California Tax Lawyers - Self Employed Tax Tips

Friday, April 10, 2015
With self-employment, an individual receives income directly from a source such as clients or other businesses instead of having an employer.  In general, the Internal Revenue Service views someone as self-employed if that person generates an income requiring a tax return to be filed since there may be profits that are potentially taxable.  

In the U.S., there are different examples of self-employers, those who are independent contractors and those who are sole proprietors, in addition to being a part of a limited liability company (LLC) or a partnership.  
There are great advantages to being self-employed, but the tax obligations are similar to employees.  Self-employers pay income taxes, as well as self-employment taxes which include Social Security and Medicare as well.  The IRS requires a self-employed individual to file a tax return if he earns over $400 which should include a Schedule SE Form.
We are business tax attorneys in Los Angeles at the California Tax Lawyer firm and we want to give you some tips about how your self-employment income affects you:
1.    Part-time work is also a form of self-employment income since it is considered supplemental income from your regular job.
2.    Self-employed taxpayers need to file a Schedule C in order to report total income earned.  If your expenses where under $5,000, you need to file a Schedule C-EZ along with your tax return. Both of these Schedules will determine what your net profit is and then use it (for Schedule SE) to compute the amount of the self-employment tax you owe.
3.    If you earned a profit, then you are required to pay income tax and self-employment tax using a Schedule SE Form to estimate the amount of the tax owed.  If you calculate that you owe tax, then you will need to file Schedule SE along with your return.
4.    There is a chance that you will need to estimate your tax and make a payment that way. This is usually paid in four installments throughout the year and the amount is not dependent on any withholding. However, if you neglect to pay the total amount of tax throughout the year, then you may be charged a penalty.
5.    There are deductions that are allowable for operating your business which are necessary.  These should be deducted during the year you acquired them.
We suggest being extremely detailed and meticulous when it comes to your self-employment taxes since there are so many business expenses.
Do you have a small business or are you self-employed?  Do you need to hire an experienced business tax attorney in Los Angeles?   The Strategic Tax Lawyers, LLP are experienced business tax attorneys in Los Angeles with years of documented successes dealing with the IRS and tax-related issues.  Contact the California Tax Lawyers for a free case consultation at (800) 669-4775.