Do independent contractors file as self-employed?

If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.

For tax purposes, the IRS treats independent contractors as self-employed individuals. That means you’re subject to a different set of tax payment and filing rules than employees. You’ll need to file a tax return with the IRS if your net earnings from self-employment are $400 or more.

What is independent self-employment?

Independent contractors are self-employed workers who provide services for an organisation under a contract for services. Independent contractors are not employees and are typically highly skilled, providing their clients with specialist skills or additional capacity on an as needed basis.

What are common questions about taxes for the self-employed?

Questions concerning deductions and proper procedure are common particularly during the first few years of filing a Schedule C. Here are answers to common tax questions often posed by the self-employed. What Is Self-employment Tax? Is it in Addition to the Regular Taxes I Typically Pay at the End of the Year? Self-employment tax is a separate tax.

Do you have to pay taxes on self employment income?

It is a tax on top of any other taxes you may owe. Self-employment taxes are payable according to the Self-Employment Contributions Act (SECA). It is the self-employed individual’s own version of FICA tax, which is typically paid by employers and employees for Social Security and Medicare. It is due on your net earnings from self-employment.

When do I have to pay taxes as an independent contractor?

If as an independent contractor, you expect to owe $1,000 or more in taxes when you file your annual return, you’ll have to make estimated quarterly tax payments. These regular payments cover your self-employment tax and your income tax liability for the year. The first quarterly tax payment for each tax year is due in April.

What is an ordinary expense for a self employed person?

An ordinary expense is something that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your job. To deduct, the expense must meet both standards. For a comprehensive list of all deductions, see our complete list of expenses and tax deductions for the self-employed.