Self Employment Deductions You Should Know About

2007-07-24 08:31:47

( Insurance )



What It Means to be Self Employed

As a self employed person, you own the company that you work for. On one hand, you have absolute control over your own activities. But on the other hand, you bear all the expenses and risks of running the business.

The self employment tax and benefits structures also differ from those of regular or part time employees who work for others.

Self Employment Deductions and Other Tax Policies

Since you are your own employer, you are required by law to pay for dual Social Security and Medicare benefits for yourself and your business, or about fifteen percent of your total salary. However, you don't need to pay taxes for earnings that exceed a ceiling amount.

You will be entitled to higher self employment deductions if you register your business as a corporation. You will still need to pay tax on your own wages, but not on earnings that you have declared as dividends.

There are other self employment deductions you can take for expenses on uniforms, mobile phones, office equipment and travel. You can also include interest expenses on business loans and depreciation of your business assets in your self employment deductions.

Precautions in Filing Self Employment Income Taxes

Filing your self employment income tax return is pretty tricky. Taxation laws and policies set by the IRS change almost every year. You have to continually update yourself about any changes. Read the instructions in the tax booklet very carefully and thoroughly before you file your returns.

The IRS and Social Security both have websites that you can access to find out about any tax law modifications. Better yet, consult a tax accountant or lawyer to have them prepare the self employment tax returns for you so that you can be sure you are filing correctly.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.