There are quite a few Connecticut residents who are self employed. While this type of job status can grant them some freedom, when it comes to income tax, they may find that they are subject to different standards than those who work for others. Here are a few things that people should know about self-employment income tax.
A self-employed individual is someone who owns his or her own business, works as an independent contractor, or is a partner in a business or trade. Those who meet the definition of being self-employed generally have to pay a lot more in taxes — but it all comes down to one’s profits and losses. Losses can be deducted, lowering one’s tax liability.
As self-employed individuals do not have anyone withholding certain taxes for them, they may need — and are generally advised — to make quarterly tax payments. This can prove helpful at tax time so that one is not left having to pay a significant lump sum. These payments can be mailed in or paid online.
Filing taxes when self employed is really no different than filing taxes when one works for someone else. It will be necessary to file a Schedule C with the 1040 form. One must be careful when filling out a Schedule C, though, as errors or questionable information may result in one being audited.
Self-employment income tax can be challenging to figure out at first. Connecticut residents who work for themselves can seek help in making sure they are doing everything right in terms of filing and paying taxes. Legal counsel can also offer assistance to those self-employed individuals who find themselves in any sort of trouble with the IRS.
Source: irs.gov, “Self Employed Individuals Tax Center“, Accessed on May 3, 2018