Tax Saving Tips for the Self-Employed
If you own your own business, or if you are an independent contractor, you would generally file IRS Schedule C, Profit or Loss From Business or Schedule C-EZ, Net Profit From Business with your Form 1040. There are several tax-saving tips you should know if you are self-employed. First, self-employment can include work in addition to your regular full-time business, such as part-time work you do at home.
If you are self-employed you generally have to pay self-employment tax. This is a social and Medicare tax similar to that withheld from paychecks of most employees. You figure the SE tax yourself using a Form 1040 Schedule SE. If you are self-employed you generally have to make estimated tax payments, even if you have a full-time or part-time job. If you don't make quarterly payments you may be penalized for underpayment at the end of the year. You can deduct the costs of running your business, if they are ordinary and necessary expenses.