When you are self-employed, you are used to wearing a number of hats. While doing so, it is easy to get behind on taxes or at least misunderstand newer tax laws. At Pacific Tax & Financial Group we have a number of self-employed clients. Helping them to navigate tax laws and understand how to make the most of their tax situation is a service we’ve provided for more than the past 20 years.
While there are several advantages to being self-employed, managing tax obligations is not one of them. Running your business requires you to take advantages of opportunities when they arise. Are you aware of the inherit opportnities available to self-employed entrepeneuers? If you are not, we’d love to show you!
SE Tax Deduction
If you are making over $400 in your self-employed venture, the IRS will require you to submit a tax return. Within this filing a specific form, called a Schedule SE (self-employment), is submitted which documents a calculation of how much you owe.
Tax Tip: Once you determine your tax payments, you can deduct 50 to 57 pecent of your SE tax payments on your 1040. This can save you hundred or even thousands in tax liability.
Creating a corporation or an LLC (limited liability company) enables self-employers to reduce their tax liability. Within the sphere of an S Corp, you have the ability to set a salary for yourself. This presents a key advantage over operating as a sole proprietorship.
Tax Tip: Under a corporation designation any excess money earned past your salary is no longer under the umbrella of self-employment taxes.
There are more ways to reduce your self-employment taxes, such as throughly preparing your Schedule C and making the most of medical costs. Would you like to know more information about paying less taxes as a self-employed professional? If so, call us to schedule an appointment.