The self-employment taxes calculator will help you to figure out how much you owe in taxes for being self-employed. This calculator bases the information on the income or loss that you business has obtained.
Self-Employment Taxes Calculator
Self-Employment Taxes Calculator Overview
With it becoming increasingly easy to start a small business, more and more Americans are choosing to follow their dreams and be their own boss. The benefits are plentiful; working hours that you choose enables you to fit work around your other responsibilities and lifestyle. You can pursue a long-held ambition and make it a huge success with plenty hard work and some good luck.
As a result of the boom in small businesses, more and more individuals are taxed as self-employed. This means that they have to calculate and pay the taxes that employers would normally deduct from their paycheck themselves. If you are self-employed, operate a farm, or are an employee of a church, then you may be responsible for paying your own employment taxes.
Why Use The Self-Employment Taxes Calculator?
The Self-Employment Taxes Calculator enables you to quickly and easily figure out how much tax you owe from your earnings. This can help you avoid getting hit with a big and unexpected bill from the IRS at the end of the tax year. Plus it is always beneficial to be able to plan ahead. Even if you just do freelance work from home, you can find yourself with a large sum to pay at the end of the year which can easily catch you off guard.
The level of tax is different depending on what type of self-employment you are engaged in, so make sure you put your information in the appropriate field on the calculator.
How To Use The Self-Employment Taxes Calculator
Ready to start? Follow these steps.
- First, indicate which of the following categories your self-employed income falls under; business, farm or church employee
- In the relevant box, enter the amount you earned or expect to earn during the year in question
- Add the amount you have been paid or expect to be paid by an employer during those same 12 months – if this exceeds a certain amount you will not be required to pay FICA (Federal Insurance Contributions Act)
- Click “View Report” for a breakdown of your earnings and taxes payable
Who is this Calculator for?
The Self-Employment Taxes Calculator is most useful if you:
- Are self-employed, have a small business or a farm, or are a church employee
- Work from home as a freelancer
- Want to know how much tax you need to pay
- Have income from both self-employed sources and as an employee of someone else
What is FICA (Federal Insurance Contributions Act)?
FICA is the law requiring employers deduct payroll tax from their employees’ paychecks, which is then contributed to Social Security and Medicare funding. Social Security gets 6.2% of the amount, and Medicare receives 1.45%. However, self-employed people pay according to SECA.
What is SECA (Self Employed Contributions Act Tax)?
SECA tax, established in 1954, is paid according to a person’s net earnings from self-employment. The basic SECA tax rate is 2x the FICA tax amount you would pay as an employee – this is in order to cover both sides of the payment; employer and employee. To make up for this, the employer side is tax deductible.