Self-Employed Tax Obligations
There are a few tax considerations to consider when you work for yourself. Generally, you’re required to file and pay estimated taxes every quarter.
Determine if you are subject to tax: Subtract your business expenses from your income. If your expenses are less than your income, the difference is part of your income. If your expenses are more than your income, the difference is a net loss.
Make quarterly payments if you’ve determined you need to make quarterly payments using Form 11040-ES.
Filing annually: If you’re filing annually, you’ll need to use Schedule C to report income or loss. To file your Social Security and Medicare taxes, you should file Schedule SE Form 1040.
Deductions: If you’re using part of your home for business, you may be able to make certain deductions, such as for your office or a portion of your home’s square footage used for business purposes.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
Footnotes and Sources
- IRS.gov, September 15, 2021