Do You Know How to Do Your Self Employment Taxes?

Posted by KC Morgan Nov 1, 2009

Do you know how to do your self employment taxes? Which form you’re supposed to fill out? What items you’re allowed to claim as end-of-the-year expenses? If you don’t really have an answer, don’t worry - lots of self employed professionals are in the same boat. Find out what you need to know about paying SE taxes.

Self Employment Tax Forms

For the most part, self employed professionals will be working with two types of tax forms: the 1099 and the 1040.

• 1099 Tax Form. This form is often uses by freelancers and independent contractors. Its main purpose is for people who need to claim “miscellaneous income,” such as royalties.

• 1040 Tax Form. Perhaps the most common self employment tax form, the 1040 form is used for professionals who need to file individual income taxes in the US.

Paying Your Self Employment Taxes

If you’ve earned self employment income in the last calendar year, you’re obliged to pay income taxes and self employment taxes on every bit of that money - minus expenses. This last part is the most important. Don’t ever forget to claim your expenses, because you’re only hurting yourself if you do.

Self employed professionals are eligible to receive tax breaks on their income if they’ve paid some of their own money toward maintaining their careers. For instance, if you purchase a health insurance policy it’s a work expense. If you use your car to buy and/or deliver goods, the gas you spent is another work expense. Starting to get the picture? Once you’ve subtracted your expenses, you’ll find that self employment taxes are much more manageable.