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The self-employment taxes calculator will help you to figure out how much you owe in taxes for being self-employed. This calculator bases the information on the income or loss that you business has obtained.
With it becoming increasingly easy to start a small business, more and more Americans are choosing to follow their dreams and be their own boss. The benefits are plentiful; working hours that you choose enables you to fit work around your other responsibilities and lifestyle. You can pursue a long-held ambition and make it a huge success with plenty hard work and some good luck.
As a result of the boom in small businesses, more and more individuals are taxed as self-employed. This means that they have to calculate and pay the taxes that employers would normally deduct from their paycheck themselves. If you are self-employed, operate a farm, or are an employee of a church, then you may be responsible for paying your own employment taxes.
The Self-Employment Taxes Calculator enables you to quickly and easily figure out how much tax you owe from your earnings. This can help you avoid getting hit with a big and unexpected bill from the IRS at the end of the tax year. Plus it is always beneficial to be able to plan ahead. Even if you just do freelance work from home, you can find yourself with a large sum to pay at the end of the year which can easily catch you off guard.
The level of tax is different depending on what type of self-employment you are engaged in, so make sure you put your information in the appropriate field on the calculator.
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The Self-Employment Taxes Calculator is most useful if you:
FICA is the law requiring employers deduct payroll tax from their employees’ paychecks, which is then contributed to Social Security and Medicare funding. Social Security gets 6.2% of the amount, and Medicare receives 1.45%. However, self-employed people pay according to SECA.
SECA tax, established in 1954, is paid according to a person’s net earnings from self-employment. The basic SECA tax rate is 2x the FICA tax amount you would pay as an employee – this is in order to cover both sides of the payment; employer and employee. To make up for this, the employer side is tax deductible.