How to Determine Self Employment Tax

Calculate How Much Tax You Owe

Each month you want to set aside self-employment tax from your self-employed earnings. It is important to put this money aside to pay your taxes. As a self-employed person, taxes are not being withdrawn from your paychecks. Self-employed taxes are based on the net earnings of the individual.

Be sure to check with your tax advisor when filing quarterly and annual self-employment tax.

Email this article to everyone that you know that might have to pay self-employment taxes.

What type of income do I have to pay self-employment tax?

Your self-employed earnings will include earnings that are made from online resources such as free lance writing, Google Adsense revenues, blogging revenue, eBay revenue and any other source online that you receive money for services or products.

Self-employment taxes are based on the combined incomes from all the different online sources. Because you did not make a minimum of $400 for one online group does not mean that the earnings from that group are exempt from self-employment tax. If you made $10 from one company and $1.00 from another company, earnings from both of these companies will be figured into your self-employment taxes.

Self-employed earnings off line include freelance writing and profit from offline business. Some people think that finishing crews and cleaning crews are exempt from self-employment tax. This is not the case.

Other areas that need to be added to the self-employment income are:

1. Church employees that earn more then $108.25 without Medicare and Social Security withholding taxes

2. Members of partnerships and trade organizations with distributed income, including guaranteed payments

3. Referral online program payments

4. Affiliate online program payments

5. Newspaper carriers

6. Estate administrators

7. Online auction dealers

8. Many real estate agents

9. Former Insurance employees

10. Statutory employees

How do I calculate my Net Income?

Net income is the income that you made during the quarter or the year for taxes. Net income is calculated by:

(Total Income Paid to You) - (Qualified Business Expenses) = Net Income