| You've done it, followed your dream and started your | | | | pay the 2.9% for Medicare. |
| own business, and now reality hits. Income tax time is | | | | When you are self employed, it is your responsibility to |
| approaching and it's time to calculate your taxes. | | | | pay quarterly estimated tax payments. If you were |
| You need to learn all you can about taxes, just as you | | | | employed your employer would do this for you, but |
| learned all you could about your business. | | | | since you get to be your own boss, you have to deal |
| Self employment tax applies to everyone who is self | | | | with this. Quarterly estimated taxes are due in April, |
| employed and made more than (let's hope so) $400 a | | | | June, Sept. and Jan. If you do not pay them you could |
| year. It doesn't matter how old you are, even old | | | | be subject to underpayment penalties. |
| enough to collect social security, the federal | | | | I would recommend that you get the big picture |
| government wants their part of your income. | | | | regarding your tax liability. You will need to plan ahead. |
| When you are employed, your employer shares the | | | | Take advantage of a free online income tax calculator |
| tax burden with you, they pay 7.65% of your income | | | | and estimate your quarterly self employment tax, and |
| and so do you. When you are self employed you get | | | | calculate your estimated income tax as well. Know |
| to pay the whole thing, 15.3%. 12.4% goes to pay | | | | ahead what is expected of you. Isn't your business |
| Social Security and 2.9% for Medicare. But this only | | | | worth it? |
| applies up to income of $94,200. Above that you only | | | | |