Self-Employed Taxpayer

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Self-Employed Taxpayer

A taxpayer who derives his/her income from his/her own business or from work as an independent contractor. In the United States, self-employed taxpayers pay double the social security tax of employed persons, but are entitled to more tax deductions. One calculates self-employed income by taking one's gross income and deducting all business expenses. For example, a self-employed taxpayer working from home may deduct a certain percentage of his/her rent or mortgage and not pay taxes on that portion of his/her income. Self-employed income is reported to the IRS on Schedule C of the 1040 Form.
References in periodicals archive ?
There are individual taxpayers and self employed taxpayers who file for extension every year in order to make sure their filing is free of errors.
Congress has now provided an adjustment to reduce the gross amount of income subject to self-employment tax to provide some equity for self employed taxpayers with employees whose employers pay one-half of their Social Security tax.
Starting in 1990, self employed taxpayers may deduct one-half of their self-employment tax as an adjustment to their gross income.
Combining federal, state and municipal income tax rates makes this adjustment by itself more to the advantage of many self employed taxpayers than the old 2% reduction.
9235 to obtain the qualifying taxable amount, self employed taxpayers with earnings over $ 57,823 (.
For self employed taxpayers with $125,000 of income, this amounts to an additional self-employment tax of $2,076.
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