How much is self employment tax?
Hi,my name is Anne,I did the following:
Q&A: How much is self employment tax?
I am a contract worker which is considered being self employed. How much do I need to set aside out of each check for taxes?
ANSWER:
Answer by Clive L
The same as any other income earner. To play safe, you should set aside 25% to 28% of your income.
However if you know approximately how much you expect to earn in twelve months then just look at the marginal rate for that level of annual income and save that percentage of each payment you receive.
So if you thought you would earn up to ,850 save 25 %, if you thought you would earn up to 4,550 then save 28%. This way you are playing it safe.
The two links below will take you to sites that show the Federal rates for USA and the Canadian rates.
In addition to the Federal tax you may be liable to State taxes as well. Check with your own State department.
Answer by Brian A
The last answer is way off. Just the self-employment tax is 15% of your gross income, then on top of that you will have regular income taxes on your taxable income. I suggest you download a copy of forms 1040, Schedule C, and Schedule SE and fill them out like it is the end of the year to estimate what you will need.
Answer by wartz
Self-Employment tax is Social Security and Medicare tax for self employed people. It is 15.3% of 92.35% of your profit. If your net earnings are ,000 the tax would be 12.96.
By the tone of your question, if you were coming to me professionally, I would ask some more questions to determine if you are really a contract worker or if you are an employee who is being misclassified as an independent contractor by an employer who want to avoid paying employment taxes and workers compensation insurance. I ave a feeling I already know the answer.
If you have to follow the employers orders about when and where to get the job done, you should be treated as an employee. If so, you should contact your state labor commissioner for formal advice.
Answer by Judy
The self employment tax comes out to a little over 14%. This is, though, in addition to income tax. So the total you need to set aside depends on your total income and personal situation, and where you live for state and local taxes. Usually around 30-35% is what you’ll need. Could be more or less than that, thoough.
Know better? Leave your own answer in the comments!
