Self-Employed Taxpayer

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 ?
The self-employed taxpayer is responsible for the self-employment tax, in effect paying both the employer's and the employee's share of the tax.
Furthermore, the deduction only applies for months when the self-employed taxpayer is not eligible to participate in a subsidized health plan maintained by an employer of either the taxpayer or the taxpayer's spouse (Sec.
Certain expenses for the self-employed - Up to 100 percent of medical insurance costs paid for the self-employed taxpayer, their spouse and their dependents may be deductible.
When a tax return is mailed to the IRS, there are at least eight people that will handle that return," says Maria Jaramillo, a tax specialist with the small business, self-employed taxpayer communication division of the IRS.
Although that case dealth with a self-employed taxpayer, in Strasser v.
However, a self-employed taxpayer may deduct one-half of this self-employment tax increase for adjusted gross income, This would reduce a taxpayer's federal income tax by up to $322 at the 1991 top rate of 31%.
The calculator then computes the aftertax present value of the net cash flows for each year and finds the total, aftertax present value of the net cash flows under both the purchase and the lease options, for either an employee or a self-employed taxpayer.
A self-employed taxpayer may be able to claim deductions for the business use of his or her home.
For example, the Internal Revenue Manual says a self-employed taxpayer will be allowed to make minimum credit card and bank loan payments if these unsecured debts are used to pay suppliers and other business expenses.
Probably the single best move a self-employed taxpayer with net earnings can make is to set up a retirement account," says Marc Britton, director, KPMG Personal Financial Planning Practice.
For example, a self-employed taxpayer with preliminary form 1040 adjusted gross income of $150,000 might decrease taxable income by $15,000 when adding a Keogh plan deduction of $10,000 (that is, the $10,000 Keogh contribution reduces AGI so as to allow 50% or $5,000 of a rental loss to become deductible).

Full browser ?