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If you’re self-employed, tax time can be confusing. Filing a federal tax return doesn’t have to be difficult, and with a little bit of information, independent contractors and small business owners can easily file returns just like the rest of the taxpaying population.
When filing a return, you are required to include a Schedule C, Profit or Loss from Business, with your Form 1040.
If you have profited from your business, you may be subject to a self-employment tax, which includes Medicare and Social Security taxes. To determine the amount of the tax you have to pay, fie Schedule SE, Self=Employment Tax, with your regular return.
Running your own business can get expensive, but luckily there are some costs that can be deducted. Most expenses can be deducted in full, however some require long-term deduction. This type of deduction is called “depreciation”, and requires you to deduct a percentage of the expense each year, for a specified number of years.
Any deductions must be deemed necessary, and can’t be uncommon. The expense must be typical to your industry, and required to help your business run smoothly and efficiently.