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 ?
For purposes of the self-employed health insurance deduction, California conforms to the federal deduction for self-employed health insurance premiums, including the amount deductible for self-employed taxpayers who are allowed the IRC Sec.
Some clients even put themselves on a payroll to take advantage of tax withholding systems, even though the IRS does not recognize self-employed taxpayers as employees.
Steber highlights some of the top deductions that self-employed taxpayers should be aware of and consider each quarter:
Self-employed taxpayers often forget to report half of their self-employment tax on the form (or fill in the wrong number).
WITH recent research showing that HMRC received more in fines from taxpayers making errors on their tax-returns rather than fines from late entries, it is important that local self-employed taxpayers are thorough in the completion with their tax returns to avoid stinging fines.
Self-employed taxpayers instead pay their own payroll taxes as "self-employment tax," which is levied against self-employment income.
THE January 31 tax deadline for online self-assessment looms large, and self-employed taxpayers could face fines of more than pounds 442 million for late or wrongly completed self-assessment forms.
Self-employed taxpayers are permitted a deduction in computing their adjusted gross income for the cost of obtaining health insurance for themselves, their spouses and children who have not attained the age of 27 by the end of the taxable year.
Currently, the tax code allows a deduction for home office expenses for self-employed taxpayers and employees who must use their home for business purposes at their employer's request.
There also are about 8,000 self-employed taxpayers who pay varying amounts of tax, depending on their income.
In further news, the government aims to combat tax evasion by companies and self-employed taxpayers and subsequently increase its revenues by applying a new action plan, Stavrakis said.

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