Thank you for breaking this down it was so helpful, I am working contract for the next 6 months and have never done it to where I had to take out my own taxes. This clarified so much. I work in the state of Texas and they don't have a state tax so I only have to worry about social security and medicare.
Ain’t that complicated. Just calculate self employment tax(easy), federal tax (easy), and state tax(kinda easy) for the whole year and divide by 4 and pay on the quarterly due dates.
Well, now I know the CPA I got royally screwed me. I paid $5k taxes on my side business that only made $16k. And everyone kept telling me to get a CPA to save money lol
this is a stupid question but im soon going LLC its been a while since ive looked at 1099 stuff... not that the 15.3% doesn't suck as it is when youre trying to be independent but... Does 1099 even get any kind of return? Like a 1040 obviously youre paying around similar percentage but obviously you get a lot of it back?
I’ve watched this a couple of times and taken notes. So easy to understand and follow. I did some random practice numbers and compared to the online estimator and it all came out accurately. I do however have one question, and I’m probably overthinking it in my head. If I’m looking at the entire year and dividing by 4 this is easy, no problem, but when I put pen to paper and do the calculations annualized feel like I am missing something obvious that should make it easier than I am. The part that slows me down is calculating the income tax withholding based on the brackets since I can’t work all the way back to the first bracket. I can do it, and I get it right when I total it up and check it as a single submission, and I understand not to take the standard deduction after Q1 a second time, that I need to apply the 20% business credit each time, etc, but I can’t seem to get streamlined in my mind is if there is a formula or series of operations I could and should apply that would help me determine the amounts of the taxable income falling into each bracket in consecutive quarters after q1. Hope that makes sense, and that maybe you can share some insight that would make the process a little less muddy in that area. Thanks again for the great tutorial, it’s very much appreciated!!
You should calculate and withhold based on the annual number and divide by 4 as you mentioned. I think you may be getting confused by calculating it as a cumulative number.
Do you also have to pay the tax bracket percentages on top of the percentage you provided? For example first 10k is 10% then to 40k it’s like 12%? So it would be the 15.3% + the percentages of the brackets you’re in based on income amount?
Not sure you will see this being it is an old video. I see where the IRS says you can pay quarterly self-employment taxes, based on estimates of the prior year net profits. What happens if you are just starting out as a reseller and wouldn't have any clue on what to pay quarterly? Can you pay it at the end of the year? Also, there is a good chance that the first year (maybe 2) because of buying merchandise and with overhead costs, you won't show a profit.
I think that paying at the end of the year before the due date of April 18 should not get any penalties since at the end of the year you will have the true gross income of side work. I am talking about just a side gig that does not gross that much if you don’t work a whole lot. The iRS just wants all that money early so they can make money off our hard work like banks do! i don’t have employees only me and most tax softwares will calculate those taxes ( Medicare and social security ) for you!!!!!
I didn't quite understand the concept at minute (3:28) . Why can't we just multiply the 100k by the 0.153 self employment tax? Why are we taking the 100k and taxing 0.765 to get to the 92,350 figure to then once again tax another 0.153? I have watched the video several times and I can't wrap my head around that part. Thanks!
It’s because to calculate net earnings, you take net profit - 1/2 self employment tax (7.65%), which gives you the 92,350. Then you use net earnings to calculate the actual self employment tax by 0.153. Remember he said self employment tax is based on net earnings and not net profit (100k).
I have 2 questions as a first time SE worker. 1st, I also work full-time at a payroll job. Do I file the W-2 separately? 2nd, why do we deduct 50% at the end? Do we not pay both the employer and employee taxes?
you can withhold on your w2 job the amount of taxes owed from SE. The reason you deduct is so it's not tax on tax. Yes, you pay the 15.3% but it's a deduction for federal taxes so it's not double counted.
Tax software will do all the work, but Turbo has been sued for false advertisement as free tax software. I have always filed my side work and w2 work together. The software will bring up every single form you will need. Just take your time, have all your info including business expenses rounded up and all your w2 s, 1099s, etc and you can do your own taxes. Unless you worked a lot, the software will eventually tell you that your best option to earn more back is with the standard deduction and standard mileage. Now if you own a full business with employees working for you, that is a whole other self employed. I am just speaking on side gig work: Uber, Lyft, instacart, postmates..etc
Okay, so I figured out this self-employment tax. Now my next question is if I need to file federal and state if my income is less than the standard deduction? (Thank you for the videos btw, I love how easy you make it)
As a self employed business is it possible I can set up quick books to deposit money to me through by business but set up to we’re it takes 15.3 percent each deposit to keep up with the quarterly pay
Hi! thank you for your video. I have a question concerning Profit and Loss Statement. For example I need to give the government's Health Insurance an update on my income for 2022, this is the first year I am totally as self employed. My question is: the total amount of my income report should be before or after taxes? That is my TOTAL INCOME minus TOTAL EXPENSES/DEDUCTIONS or TOTAL INCOME minus TOTAL EXPENSES/DEDUCTIONS minus TAXES? Should I apply any On Net Profit percentage? Thank you
that is a great question...you probably need more guidance than a simple response of net profit. But in general, that is the answer. Join our members only section for more detailed responses.
Hi there! I currently have two online 1099 jobs but only make about $11k a year from them...do I seriously have to pay self-employment taxes (15.3% before deductions) on this little amount?
"You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax." ?????
Need some more clarity. So in this scenario how much would you have to pay total in taxes, fed soc sec & med? Cuz I see how you got to 7065, but what is the total amount to be paid once all is said and done?
Self employment taxes are ridiculous I’m paying more in taxes in one quarter from self employment than I paid in the entire year at my w-2 job. Making not even that much more. I just don’t have a ton of expenses to right off. It’s so lame
So if we made 24k profit in a year, filling married jointly, do we subtract the 12k per person standard deduction first? Would that mean I have to pay no self employment tax said or Medicare tax? Or does the standard deduction of 12k per person only apply to income tax?
I'm new to this so I have a question. The around 15 percent your paying for self employment tax? Are you then just paying the additional state income tax or are you paying for the self employment tax along with the federal and state income tax
You need to pay estimated quarterly taxes which you can do through the IRS website. www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system
@@TravisSickle trying to understand/learn how it's calculated. I've always turned things over to an accountant and not worried about anything but I'm doing fairly well now and need to learn what exactly I'm paying and why.
So just double tapping here- line 6 is considered the standard deduction correct? And should I have more to deduct than what the standard is offering, in this case 7k, I should itemize. Correct?
correct. It's deductible for any entity type. It's a business expense. You can file as a sch C, which is probably what you're referring to. You can also be an LLC and file as an S-corp.
I drive for uber and DoorDash in total I made 27k in 2021, I’m filling and married and I have a child, around how much should I expect to pay ? Anyone can help?
I have a question. REEEEEEEEEEEE! I'm going to need someone to do this for me. Holy crap. Almost makes me want to not take any money from clients and be a 1040 lumper.
as a head of household with 25,000 yearly as a self employed Do I still paid some kind of tax? Medicare and social security? or not at all with that kind of net income bracket? thanks
The payroll taxes don't relate to your filing status. Federal taxes do. Just keep that in mind. Currently you could defer payroll taxes but if you don't need the money you may want to either put it aside or pay it. It's deferred, not forgiven.
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Here is the blog post bit.ly/3MKFq2l
I loved this video! Thanks for breaking it down and explaining it so simply.
Thank you for breaking this down it was so helpful, I am working contract for the next 6 months and have never done it to where I had to take out my own taxes. This clarified so much. I work in the state of Texas and they don't have a state tax so I only have to worry about social security and medicare.
😬🤯😖🥴 what is not to love about begin a business owner in the USA spend more time on taxes than eating, sleeping and working combined!
Ain’t that complicated. Just calculate self employment tax(easy), federal tax (easy), and state tax(kinda easy) for the whole year and divide by 4 and pay on the quarterly due dates.
If I calculate the amount I have to pay, I just add $5-$6 more if I underpay for some reason.
You don't even have to be a business owner IN the USA... you can just be an American citizen who has been in Morocco for more than one year. ;-)
Read profit first
Well, now I know the CPA I got royally screwed me. I paid $5k taxes on my side business that only made $16k. And everyone kept telling me to get a CPA to save money lol
My wife side business only made 700.00 and yeah talk about screwed .
you really screwed :(
this is a stupid question but im soon going LLC its been a while since ive looked at 1099 stuff... not that the 15.3% doesn't suck as it is when youre trying to be independent but... Does 1099 even get any kind of return? Like a 1040 obviously youre paying around similar percentage but obviously you get a lot of it back?
LLC and sole prop are taxes the same.
This video was awesome, thank you!
Glad you liked it!
Good content. You should do another video if the business net profit is $500,000. I want to see how self employed tax is calculated.
Thank you. I couldn't for the life of me figure out from where out of their asses all these articles were pulling this 92.35% figure. Great help.
Greatly explained. New subscriber! Thanks a lot.
Finally a video that explains how to deduct my self employment tax! New Sub
Thank you
Thanks for the video!!
I’ve watched this a couple of times and taken notes. So easy to understand and follow. I did some random practice numbers and compared to the online estimator and it all came out accurately. I do however have one question, and I’m probably overthinking it in my head.
If I’m looking at the entire year and dividing by 4 this is easy, no problem, but when I put pen to paper and do the calculations annualized feel like I am missing something obvious that should make it easier than I am. The part that slows me down is calculating the income tax withholding based on the brackets since I can’t work all the way back to the first bracket. I can do it, and I get it right when I total it up and check it as a single submission, and I understand not to take the standard deduction after Q1 a second time, that I need to apply the 20% business credit each time, etc, but I can’t seem to get streamlined in my mind is if there is a formula or series of operations I could and should apply that would help me determine the amounts of the taxable income falling into each bracket in consecutive quarters after q1.
Hope that makes sense, and that maybe you can share some insight that would make the process a little less muddy in that area.
Thanks again for the great tutorial, it’s very much appreciated!!
You should calculate and withhold based on the annual number and divide by 4 as you mentioned.
I think you may be getting confused by calculating it as a cumulative number.
Join the discord chat for more help. It’s free for now. Link in description.
So Line 6 (the 7k) is the amount of taxes due?? I was following good up until that calculation.
The BEST!
Thanks a lot
Great video!!! 👏🏿👏🏿👏🏿👏🏿
Thank you so much, very helpful hey!!!
Glad it helped!
Do you also have to pay the tax bracket percentages on top of the percentage you provided? For example first 10k is 10% then to 40k it’s like 12%? So it would be the 15.3% + the percentages of the brackets you’re in based on income amount?
Yes, it is on top of the 15%! Just had that question myself a few days ago.
The social security 12.4% gets capped at $147k.
@@TravisSickle does that 147k cap still apply if you are married filling jointly or is it 147k per person?
THANK YOU SOO MUCH FOR THIS VIDEO! Lifesaver
Thanks very informative.
Not sure you will see this being it is an old video. I see where the IRS says you can pay quarterly self-employment taxes, based on estimates of the prior year net profits. What happens if you are just starting out as a reseller and wouldn't have any clue on what to pay quarterly? Can you pay it at the end of the year? Also, there is a good chance that the first year (maybe 2) because of buying merchandise and with overhead costs, you won't show a profit.
Then you will pay at end of year. First year isn’t required.
thank you for great video, questions, do you know if total medical expenses can be tax deduction?
I understand the numbers but how about federal and state taxes? Is that included in the self employment tax or is that what that is?
Separate
It’s separate and I’m really considering at this point leaving my job as a freelancer lol
I think that paying at the end of the year before the due date of April 18 should not get any penalties since at the end of the year you will have the true gross income of side work. I am talking about just a side gig that does not gross that much if you don’t work a whole lot. The iRS just wants all that money early so they can make money off our hard work like banks do! i don’t have employees only me and most tax softwares will calculate those taxes ( Medicare and social security ) for you!!!!!
oh my gosh thank you!
I didn't quite understand the concept at minute (3:28) . Why can't we just multiply the 100k by the 0.153 self employment tax?
Why are we taking the 100k and taxing 0.765 to get to the 92,350 figure to then once again tax another 0.153? I have watched the video several times and I can't wrap my head around that part. Thanks!
It’s because to calculate net earnings, you take net profit - 1/2 self employment tax (7.65%), which gives you the 92,350. Then you use net earnings to calculate the actual self employment tax by 0.153. Remember he said self employment tax is based on net earnings and not net profit (100k).
Good information!
So what’s the total ? How much you paying on tax ?
I have 2 questions as a first time SE worker. 1st, I also work full-time at a payroll job. Do I file the W-2 separately? 2nd, why do we deduct 50% at the end? Do we not pay both the employer and employee taxes?
you can withhold on your w2 job the amount of taxes owed from SE. The reason you deduct is so it's not tax on tax. Yes, you pay the 15.3% but it's a deduction for federal taxes so it's not double counted.
Tax software will do all the work, but Turbo has been sued for false advertisement as free tax software. I have always filed my side work and w2 work together. The software will bring up every single form you will need. Just take your time, have all your info including business expenses rounded up and all your w2 s, 1099s, etc and you can do your own taxes. Unless you worked a lot, the software will eventually tell you that your best option to earn more back is with the standard deduction and standard mileage. Now if you own a full business with employees working for you, that is a whole other self employed. I am just speaking on side gig work: Uber, Lyft, instacart, postmates..etc
@@synthesizerisking2886 so do you recommend the turbo tax app? i just got into the self employed route
What about state income tax? For example, it's 4.4% here in Colorado. So would it be 15.3 + 4.4 totaling 19.7% that I would take out every paycheck?
State taxes should be calculated and withheld separately.
Okay, so I figured out this self-employment tax. Now my next question is if I need to file federal and state if my income is less than the standard deduction? (Thank you for the videos btw, I love how easy you make it)
If you withheld anything you should file so you can get a refund.
@@TravisSickle Thank you! ❤️
hey Travis Do the self employed people need to pay for SS and Medicare while filing their tax? or is there a way to make monthly contributions?
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what if sch C is a loss? Exp. higher than Income?
As a self employed business is it possible I can set up quick books to deposit money to me through by business but set up to we’re it takes 15.3 percent each deposit to keep up with the quarterly pay
Hi! thank you for your video. I have a question concerning Profit and Loss Statement. For example I need to give the government's Health Insurance an update on my income for 2022, this is the first year I am totally as self employed. My question is: the total amount of my income report should be before or after taxes? That is my TOTAL INCOME minus TOTAL EXPENSES/DEDUCTIONS or TOTAL INCOME minus TOTAL EXPENSES/DEDUCTIONS minus TAXES?
Should I apply any On Net Profit percentage?
Thank you
that is a great question...you probably need more guidance than a simple response of net profit. But in general, that is the answer. Join our members only section for more detailed responses.
Hi there! I currently have two online 1099 jobs but only make about $11k a year from them...do I seriously have to pay self-employment taxes (15.3% before deductions) on this little amount?
If I work overseas self employment or any job I pay taxes or social security
"You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax."
?????
this deduction helps lower the income on which you're taxed but doesn't change the actual self-employment tax you owe.
Need some more clarity. So in this scenario how much would you have to pay total in taxes, fed soc sec & med? Cuz I see how you got to 7065, but what is the total amount to be paid once all is said and done?
Too many factors to answer definitively. In the video it’s $14,130 for SE tax.
😭😭😭😭😭😭
I understand nothing! WAAAAAAAA
Same.
Self employment taxes are ridiculous I’m paying more in taxes in one quarter from self employment than I paid in the entire year at my w-2 job. Making not even that much more. I just don’t have a ton of expenses to right off. It’s so lame
Yeah, it’s crazy. But you’re also making a little more.
@@TravisSickle about Double. But my tax payments are 4xing
how would this work with income tax included? which do you calculate first?
Payroll taxes first
So if we made 24k profit in a year, filling married jointly, do we subtract the 12k per person standard deduction first? Would that mean I have to pay no self employment tax said or Medicare tax? Or does the standard deduction of 12k per person only apply to income tax?
self employment is based on net profit.
@@TravisSickle Thank you for answering. I don't know how I didn't get it from the video. So yes, before the standard deductions.
is SE tax the same as federal income tax or do you have to pay that separately?
Do you have to pay SE tax + state income tax + federal income tax?
according to this comment section you have to pay all of these as they are separate.....
So do you Pay only what’s in the box #6?
Question - if we plan to itemize deductions, do we add that estimated amount onto the standard deduction?
No, it’s one or the other. Unless you’re itemizing on the business level.
@@TravisSickle Ok, so it you think you would be deducting less than the standard deduction, should you stick with that standard?
Yes, most tax software will figure that out for you. It’s not common to do itemized anymore.
I'm new to this so I have a question. The around 15 percent your paying for self employment tax? Are you then just paying the additional state income tax or are you paying for the self employment tax along with the federal and state income tax
You need to pay estimated quarterly taxes which you can do through the IRS website. www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system
do these percent change often year to year?
so the amount of taxes owned for that year was 7K?
Which forms to you fill out first the Schedule-C or the SE, or 1040? What order do you fill out all of the forms? Thanks in advance.
C, SE, 1040
@@TravisSickle Thanks
Thank youuu
This makes sense, but do you also have to pay federal income tax on top of this? I can't find a concrete answer on how to calculate that.
Yes
same! I can't find two websites or youtube channels to explain how to calculate the income tax part!
Are you trying to understand how it’s calculated or just to fill out tax forms?
@@TravisSickle trying to understand/learn how it's calculated. I've always turned things over to an accountant and not worried about anything but I'm doing fairly well now and need to learn what exactly I'm paying and why.
Ok thanks for letting me know. I’ll see if I can do a video putting the two together.
So just double tapping here- line 6 is considered the standard deduction correct? And should I have more to deduct than what the standard is offering, in this case 7k, I should itemize. Correct?
No, you’ll need more than the standard deduction to itemize. It’s either or.
Itemize at the business level.
i still dont understand How can i add my car on here? I use my cars for my business
I just want to pay the federal and self employment tax and be done with it. Keep it simple.
Bro what To Answer in Part 3 line 18 in SE TAX form.. i did amazon flex, and i just made 651.. (i just try it for 1 month)
im still confused
If ur an llc you can deduct half the self employment tax correct?
correct. It's deductible for any entity type. It's a business expense. You can file as a sch C, which is probably what you're referring to. You can also be an LLC and file as an S-corp.
You owe on line 5 or 6?
I drive for uber and DoorDash in total I made 27k in 2021, I’m filling and married and I have a child, around how much should I expect to pay ? Anyone can help?
So do we pay line 5, or line 6 in Texas?
this is federal, doesn't matter what state you're in. Like 6 is subtracted from line 5.
@@TravisSickle so it means at the end we still pay only 1 part, not double?
Because we are deducting the half here
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I have a question. REEEEEEEEEEEE! I'm going to need someone to do this for me. Holy crap. Almost makes me want to not take any money from clients and be a 1040 lumper.
Call our office, we can help. 813-321-6423
as a head of household with 25,000 yearly as a self employed Do I still paid some kind of tax? Medicare and social security? or not at all with that kind of net income bracket? thanks
The payroll taxes don't relate to your filing status. Federal taxes do. Just keep that in mind. Currently you could defer payroll taxes but if you don't need the money you may want to either put it aside or pay it. It's deferred, not forgiven.
Tom Hardy is that you?
Is this new ?
The tax?
@@TravisSickle I don’t see the SE form in my 2019 taxes ?
@@TravisSickle our tax guy past away last year and everything is new , along with retirement
Call our office 813-321-6423
thank you school for teaching me a bunch of bullshit instead of this
I feel subtly uncomfortable by learning about taxes by a guy named Sickle
🤦
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