How much tax for self-employed
Q. Is there a calculator that would help someone determine how much estimated payments I can make since I am self-employed?
A. Unfortunately, there is no easy-to-use tool for calculating self-employment liability for estimated payments. Because the self-employed have to match Social Security and Medicare, yet get a credit for it above the line on the 1040, the actually liability is much more complicated to determine.
The number you would start with is based on last year’s tax liability. This is determined by your accountant when you complete your 1040 form and associated schedules. Essentially, you can split last year’s liability into 4 parts and make that as your payment. If you anticipate an increase in revenue, you may want to increase that number to ensure that you do not end up with underpayment penalties. Again, your accountant can help you determine how much these payments should be.
Employees have several options for easy-to-use calculators to help them estimate their tax liability and payments. Online paycheck calculators can be found at the ADP Employer Resource Center, PaycheckCity.com, PayCycle.com and Payroll-Taxes.com. Due to the complex nature of the self-employed calculation, there is no similar tool for you however.
Tags: estimated payments, independent contractor, self employed, tax calculator, tax liability, tax return
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