Filing taxes can be an intimidating experience for anyone, but especially for those who own their own businesses, work within the gig economy, or are otherwise self-employed.
If you’re filing a complex tax return with multiple streams of income and business deductions, you should speak with a tax professional before submitting your returns. If you’re dealing with credit card debt amidst your search for ways to save money, companies like CreditGUARD are here for you with credit counseling and debt management solutions, but credit counselors cannot give tax advice.
Who has to file a self-employment tax return?
Whether you’re a part-time contractor, full-time business owner or anything in between, you’re going to have to file taxes. As someone self-employed, you have to file an income tax return if your net earnings from self-employment were $400 or more. And if you’re earning income as an employee, you’ll still have to file your normal W2 for your job as well.
What is the process for filing taxes as self-employed?
Spoiler alert: filing your taxes as a business or independent contractor requires more steps and more work than a simple W2 filing for a traditional employee. Luckily, the IRS has created tax training for the self-employed. It’s a nine-part series that breaks down many of the common questions and challenges that small business owners and independent contractors face.
Before you can calculate what you’ll owe in taxes, you have to figure out your profits and losses as a business. You can do this by adding up all of your business income and subtracting any costs or losses incurred as a part of doing business.
As you can imagine, there are many things that complicate the issue of what’s considered a business cost or a loss against which to measure your profitability as a business. That’s why it’s absolutely essential to have a tax accountant – whether it’s a CPA or a bookkeeper who can help you out. If you do this yourself, be prepared to spend a lot of time and energy trying to figure it all out. Even with the official IRS resources, it can be really challenging.
What forms do I have to file for self-employed taxes?
When it comes to IRS forms for the self-employed, you’ll be unsurprised to know that well, it’s complicated.
For starters, you’ll need to fill out a Schedule C to report your income. Your actual tax form will be a 1040-ES which will require you to make quarterly estimated payments. If you don’t file quarterly, you’ll be fined and have to pay more in taxes.
You’ve also still got to pay Medicare and Social Security. For this you’ll need to fill out a Schedule SE.
If you have any family members working in your business, you’ll also owe for their Medicare and Social Security contributions depending on the business structure.
Because all of this can get really complex really quickly, it’s best that you make the investment and go to a tax professional rather than risking it and doing your own business taxes. A great CPA can help advise you financially and also help you save money in your business.
When to Call a Credit Counselor
Certified credit counselors can’t help you answer tax questions or file self-employed taxes. But they may be able to help you get your finances in order so that credit card debt isn’t one more thing on your plate come tax return season.
If you’re dealing with a credit card debt situation that feels bigger than you can resolve on your own or you’ve been falling behind on your monthly payments, a credit counselor may be able to help – it’s worth a call to learn more about programs that may be available to you.