Self employment tax calculator
Find self-employed taxes and deductions using A.I
Self employment tax calculator
Find self-employed taxes and deductions using A.I
Add your annual amounts
Expected 1099 income
Expected W2 income (Optional)
Add your deductions (deductible business expense)
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What Makes Self-Employment Taxes So Important?
It can be a challenge to save money for a new car or a dream vacation, let alone for retirement or a child's education. It can feel even more difficult to save money to pay your taxes, but for self-employed individuals, it's just as important as any of those other reasons we just listed.
That's because if you don't save enough to upgrade your ride, you can simply keep the car you have. But if you're unable to pay your self-employment taxes when it's time, you could be faced with some penalties from the IRS.
We see it this way – the IRS has penalties so taxpayers can understand the urgency and pay their taxes on time. But the IRS will not tell you how much you owe, especially if you are self-employed, and you’ll need to calculate self-employment tax on your own. Sound like a big task?
Well, it kind of is. Self-employed individuals pay Social Security and Medicare taxes along with the regular income taxes. This is where a self-employment tax calculator can really save the day, but more on that later.
Key takeaways:
- 1099 taxes cover Social Security and Medicare
- Deductions can go a long way to lowering the amount you pay
- A self-employed tax calculator factors in your income and finds your tax amount more accurately
Table of contents
Why is self-employment tax so high?...Read more
How do I pay myself from my LLC?...Read more
How can a self-employed tax estimator help?...Read more
What about the SECA tax?...Read more
How much are self-employment taxes?...Read more
What is the Social Security tax limit for 2024?...Read more
Do you get Social Security and Medicare tax back?...Read more
Is there a separate California Medicare tax?...Read more
Why am I paying Medicare tax?...Read more
More on deductions and how they lower self-employment tax...Read more
Does a self-employment tax estimator simplify taxes?...Read more
Does Social Security affect self-employed retirement plans?...Read more
How much is taken out of Social Security for Medicare?...Read more
Can I find my 401(k) with my Social Security Number (SSN)?...Read more
Why is self-employment tax so high?
When you're self-employed, it might feel like your tax bill is huge at the end of the year, but in reality, there's every possibility that you can end up paying less in tax than if you were an employee of a company and received a W-2 at the end of the year.
It's easy to see why when you look at the hundreds of tax deductions available to freelancers, independent contractors and self-employed individuals. As a freelancer, you can easily factor in self-employed tax deductions to estimate your self-employment taxes to pay the right amount to the IRS.
Employees for any corporation have taxes automatically deducted from their paychecks every two weeks. If you're a salaried employee in Wisconsin making $80,000 a year and filing a tax return as a single person, you would pay about $10,350 in federal income tax and $5,600 in state taxes. It matters which tax bracket you fall into, and you can find out with a federal tax bracket calculator.
Still, if you're a freelance software developer or rideshare driver, for example, making $80,000 in Wisconsin, you could write off part of your rent as a home office expense or part of your gas and car insurance as tax deductions for the self-employed. The IRS recently raised the standard mileage deduction so you can also write off the business portion of your vehicle mileage.
You can check the latest standard mileage rates if you drive for business purposes and also see the difference between itemizing your vehicle expenses or going for the standard mileage deduction method.
If you’re a self-employed dentist and have a patient checkup and dental treatment facility at your home, you can claim a number of self-employed tax deductions. These include the cost of equipment like lights, tools for examining patients, work benches, chairs for the waiting area and decoration items in the waiting area.
You can also claim a subscription to Netflix and the cost of a TV you use to entertain your patients. With these and the many other self-employed tax deductions you can take, you could end up paying less than the salaried employee. You just need to know how much SE taxes you’ll need to pay and how to use a self-employment income tax calculator.
A Social Security tax calculator can be useful when calculating your owed Medicare and Social Security from 1099 income. This makes up a big chunk of your earnings, so it's a good idea to calculate this as accurately as possible.
How do I pay myself from my LLC?
If you’re a small business owner operating as an LLC, you might need to pay SE tax, depending on whether or not you’re taxed as a pass-through entity. You can pay yourself through an “owner’s draw,” which means you can transfer some of the business’ income to yourself as a salary. An LLC tax calculator can help you figure out what you owe.
Can I transfer money from an LLC to a personal account? You can, but you will need to keep proper documentation of these transactions to avoid triggering an IRS audit.
How can a self-employed tax estimator help?
People who work for themselves and receive a 1099 form pay tax on the income they owe, but they also pay self-employment tax. Technically, they're called FICA (Federal Insurance Contributions Act) taxes and they pay for a couple of the most important national insurance programs Americans have to rely on: Social Security and Medicare.
A Social Security tax calculator can help you find your owed amount. Similarly, a Medicare tax calculator can help you navigate your Medicare taxes. The Social Security and Medicare tax rate for 2024 is 12.4% for Social Security taxes and 2.9% for Medicare taxes.
What about the SECA tax?
It can be easy to get confused about the different taxes self-employed people have to pay because some have more than one name. Self-employment taxes even have a third name we don't hear as often. SECA taxes are just another name for FICA taxes but for self-employed individuals.
The IRS often uses it because it is a federal act, the Self-Employed Contributions Act (passed in 1954), aka SECA tax, that requires self-employed people to pay these taxes. You might also see SE tax used sometimes, an abbreviation for self-employment tax. These are just synonyms of the same self-employment tax. It can also be called the 1099 tax.
How much are self-employment taxes?
It might feel better to know that if you must pay a federal self-employment tax, at least it funds programs that provide income and health insurance to people who need it. That includes your friends and family who are aging out of the workforce or who get injured and are unable to work.
We hope that time never comes, but SECA can also support you if the going ever gets tough. But right now, it might be more important to know the actual numbers and how to calculate or estimate your self-employment taxes. The total self-employment or SECA tax rate is 15.3%.
If you look back to our $80K example – working as a software developer or rideshare driver – you would owe $12,240 in SE tax. Remember you can write off many business expenses (maybe more than you think) to lower that number. In fact, the IRS lets self-employed people write off half the amount of their SE tax as a self-employed tax deduction.
Is there a separate California Medicare tax?
In California, there's often some confusion around the term "California Medicare tax" because it's not a standalone tax like the federal Medicare tax. Instead, California has a “Medi-Cal” program that provides healthcare coverage to eligible low-income residents.
Why am I paying Medicare tax?
Medicare taxes are used to cover your medical expenses once you retire. While the coverage you get will depend on the type of Medicare plan you choose, most of your hospital visits and prescription drugs will be covered by Medicare. It’s important that you do enough research about all the different Medicare plans before you pick the best fit for you. A self-employed income tax calculator can help you total how much of your earned income goes towards these expenses.
More on deductions and how they lower self-employment tax
You may own a business making and selling your own clothing line or a line of nutritional supplements, and you're a single-filer. All of your sales are processed using third-party apps like Venmo and PayPal,and at the end of the year, you receive a self-employed 1099 form called 1099-K, which reports those sales to the IRS and you.
Sometimes, you might not receive a 1099-K. This might be because you made less than the income limit. You can simply check your bank statements and find all the income from the third-party apps to correctly calculate self-employment tax. Or you can use FlyFin’s built-in income tracker to do the work for you.
Apart from 1099 forms, self-employed individuals also have to know about tax form Schedule C. This is the most important tax form for freelancers as it reports net self-employed income and deductions. You will use the net income on Schedule C to calculate your self-employed tax on Schedule SE, another self-employed form.
So, what are some tax deductions for the self-employed? When you work out of a home office a portion of your rent can be written off from your taxable income. And, if you use software to keep track of your sales or spend money on marketing in the form of online ads, all of these are tax-deductible.
You can also write off part of your phone and internet bill , business meals, office supplies and even your CPA fees!
All these write-offs get subtracted from your income, meaning there's less income you need to pay tax on. If your deductible business expenses add up to $15,000 for the year, self-employment tax only gets applied to $65,000 ($80,000-$15,000), which is your net income. A business tax calculator can make this easier.
Keeping track of all your business expenses so you don't miss a single tax write-off is, of course, the goal if you want to pay as little as possible in taxes. But it's not always easy to use spreadsheets and save all your receipts throughout the year.
That's why FlyFin exists. An app automatically tracking all of your business expenses can be a game-changer. AI finds every possible tax write-off, and a built-in self-employment tax calculator accurately finds your tax liability.
Does a self-employment tax estimator simplify taxes?
Using a self-employed tax calculator is by far the easiest way to know how much you will need to pay the IRS when tax season rolls around.
When you're self-employed, you've got more to worry about than W-2 employees do. Don't add figuring out how to calculate self-employment tax on your own to it. Use a self-employed tax calculator to avoid making mistakes on your tax return when the tax season comes around.
Having a better understanding of the amount you need to set aside to pay your quarterly taxes is also helpful. A lot of people struggle with setting aside the correct amount and often end up either underpaying or overpaying their taxes.
Frequently asked questions
FAQs
How to calculate self-employed tax?
How much should I set aside for self-employment taxes?
How do I get the biggest tax refund when self-employed?
How do I avoid paying tax when self-employed?
Is being self-employed worth it for taxes?
How do I pay myself as self-employed?
Should I pay myself a salary from my LLC?
How do I file taxes if I am self-employed and paid in cash?
How do I show proof of income if I’m self-employed and paid in cash?
What accounts can the IRS not touch?
How much cash can you make without reporting to the IRS?
What is the tax form Schedule C?
Who can use a self-employed tax calculator?
What’s FlyFin?
FlyFin caters to the tax needs of gig workers, freelancers, independent contractors and sole proprietors. This tax tool is especially helpful for gig workers, who don't have tax support from an employer like W-2 employees do.
FlyFin tracks all your business expenses using A.I. to find every possible tax deduction. You can also consult our expert CPA team to file a guaranteed 100% accurate tax return. It saves you a couple of thousand dollars and a ton of time on your taxes.
Download the FlyFin app and have your 1099 taxes filed in less than fifteen minutes, saving you time and more money on your taxes than last year, guaranteed.
Expert tax CPAs ensure 100%-accurate tax filing
A.I. finds every tax deduction, eliminating 95% of your work
On average users save $3,700
