I Am Self-Employed – Do I Need to Pay Taxes?

On: October 23, 2023

There are many conveniences to being self-employed from making your own hours to choosing the types of projects you work on. One of the things you don’t have a choice or much flexibility on at all is paying taxes. Even individuals who are self-employed are required to pay taxes.

Understanding taxes around self-employment can be difficult, especially if you are new to the game. Working with a team of IRS tax experts is a surefire way to guarantee that your tax return will be filled out correctly, you will file on time, and you will avoid an audit.

Who Is Considered to Be Self-Employed?

An individual who is self-employed earns money through independent means as opposed to working for a company. Not everyone is considered self-employed by IRS terms, so you must meet certain criteria. Two examples of someone who is self-employed include a business owner and an independent contractor.

Self-employment sounds pretty awesome, but it can be quite difficult, especially when it comes to taxes. There are many requirements, higher taxation, and a lot of responsibility.

Am I Obligated to Pay Taxes Since I Am Self-Employed?

Yes. You are required to file an annual tax return and you are also required to make estimated quarterly payments. You will need to keep good records of your tax payments to avoid any serious penalties or fines.

Many people assume that the quarterly tax payment is optional, but it is not. Since taxes are taken out automatically from an employee’s paycheck, traditional employees do not have to worry about taxes like self-employed individuals do. No taxes are withheld from your self-employment income, so it is up to you to withhold them.

Are There Deductions Available to Self-Employed People?

Yes. There are several deductions that are only available to individuals who are self-employed. This is because being self-employed means that you utilize much of your own money to fund or even operate your business.

A deduction helps to lower the amount of taxes that you owe to the IRS by subtracting any expenses that you have incurred over the year.

Some of the most commonly claimed self-employment deductions include:

• Mileage
• Home office
• Business trips
• Internet or phone bill

Understanding what deductions you can take and which ones you qualify for is important. Claiming too many deductions or the wrong ones can flag your return for an IRS tax audit.

Leading Tax Group Can Help You File Taxes on Your Self-Employment Income

Being self-employed comes with a lot of perks but it does have its downsides too. One of those downsides is filing taxes and making the estimated quarterly payments. Unfortunately, many new individuals to the self-employment realm do not even know they are responsible for these things and find themselves owing the IRS money.

Working with our team here at Leading Tax Group, we will provide you with guidance on self-employment taxes. We will review your income, deductions, and credits with you. Our team fully understands self-employment tax and can walk you through it all.

Hiring IRS tax experts such as our team here at Leading Tax Group is a great move and can protect you from the IRS. Don’t wait another minute and reach out to us today to schedule your free consultation to discuss your tax matter.