Tax time can come as a huge surprise for a large number of self employed people. One of the biggest things that self employed people enjoy is getting paid with no taxes being withheld. It is unfortunately also the reason that many people do not seem to realize how much money they are going to be responsible for paying once tax time comes.
Those people that are self employed are held responsible for paying the SE tax (also known as the self employment tax) in addition to needing to pay the normal federal and state taxes. The self employment tax is generally comprised of 15.4% of your yearly income. The reason for this is that people that are employed by a company have the company paying half of this particular tax.

Do not be discouraged though as you as a self employed individual will be able to deduct half of this tax when you file your taxes which will reduce your taxable income.

No generally if you are self employed you are going to need to file the following tax forms.

Form 1040 (for federal taxes)
Schedule SE (for self-employed tax)
Schedule C (for income)
Schedule D (for losses)

When you are filing your taxes you need to make sure that you are keeping very accurate records. This will help you avoid being audited and paying any fines and if you have the proper documentation you will be able to back up all your claimed tax deductions.

There are a great number of self employed people choose to utilize itemized deductions as a method to lower their tax bill. If you are self employed you are able to deduct business expenses, some medical expenses, and charitable contributions. You can reduce your income even further by contributing to some type of IRA fund.

You should not worry if all of this information seems a bit confusing to you. Filing out taxes when you are self employed can be a lot more complicated then filing out taxes when you work at a brick and mortar company. Many self employed people early on the services of a tax professional to do their taxes for them as self employed people are twice as likely to be called for an audit. While that is quite alright for many people, with the proper amount of learning you can get your taxes filed out right with no problems.

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