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Tax season can be especially frustrating for gig workers — the millions of self-employed professionals who likely need to follow different rules when figuring out how much they owe the government.
Along with federal and state income taxes, self-employed gig workers owe an additional 15.3% in self-employment taxes, with 12.4% to Social Security and 2.9% to Medicare. Your clients may send you ...
This is because employers pay half the taxes for you — but self-employed individuals pay all of it. Luckily, you can deduct half of self-employment taxes paid on your tax return. 2. Home Office
The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
Independent contractors are considered self-employed and are also subject to self-employment tax. Self-employed individuals are generally required to file an annual return and pay estimated tax on ...
However, there are various vehicles available to self-employed individuals to save for retirement. Many set up a Simplified Employee Pension Plan (SEP) IRA, which allows them to contribute up to 25% of their income, up to $54,000 (2017) per year. There is also a vehicle called the Self-Employed 401k (or SE 401(k)) for self-employed people. The ...
The Offer in Compromise (OIC) program, in the United States, is an Internal Revenue Service (IRS) program under 26 U.S.C. § 7122, which allows qualified individuals with an unpaid tax debt to negotiate a settled amount that is less than the total owed to clear the debt. A taxpayer uses the checklist in the Form 656, OIC package to determine if ...
A Solo 401(k) (also known as a Self Employed 401(k) or Individual 401(k)) is a 401(k) qualified retirement plan for Americans that was designed specifically for employers with no full-time employees other than the business owner(s) and their spouse(s). The general 401(k) plan gives employees an incentive to save for retirement by allowing them ...