Self-Employment and Doing Your Taxes

Every year, the government makes it a little bit more impossible for people to do their own taxes. When your income is from self-employment, doing your taxes is a pain.

In self-employment, 90% of the time your income is going to come to you in a gross amount, with no taxes taken out. Even for work at home positions, companies will often hire employees on an "independent contractor" basis.

An independent contractor is someone who works with a company but who really works for themselves, meaning that the company does not put the person on the payroll or give them a regular paycheck with taxes taken out.

In self-employment, work from home jobs, or being an independent contractor, it all means the same thing: you have to claim all income taxes yourself. You will have to claim all of your income with the federal government, as per the law. Because you will not have taxes taken out of your checks as you receive them, you will no doubt end up owing money for taxes when Spring comes.

This is a gruesome fact of self-employment. There are ways to keep yourself from going broke paying out taxes, however. If you work from home, you can get a tax break on the electricity you use, your phone bill, the cost of office supplies, etc. Anything you have to pay our for your business, save the receipt. This will make tax time a lot easier.

And most importantly, consult with a tax professional when it comes to doing your self-employment, or independent contractor, taxes. They will help you pay the smallest amount back to Uncle Sam.