Which Tax Return Form to Fill Out for Self Employed - EXCOL, LLC
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Which Tax Return Form to Fill Out for Self Employed


Which Form to Fill Out

Self-employed individuals comprise those under any of the following categories:

  • Those who conduct business or trade as a sole proprietorship or independent contractors 
  • Those in a partnership that executes business or trade
  • Those in part-time businesses

Please note that the fact that you are self-employed does not outrightly mean you should file an income tax return. If your business just started and has not made a cent so far, you shouldn’t worry about paying taxes. You are required to file an income tax return if you had a total self-employment income of at least $400. If you earned less than the mentioned amount, you still need to file an income tax return if you satisfy the other filing requirements captured in Form 1040 and 1040-SR.

Self-Employed Tax Obligations

Being self-employed means you should pay the self-employment tax (SE) and the income tax. SE tax is a Social Security and Medicare tax that impacts those who work for themselves. You can view it in the same way as the Social Security and Medicare taxes withheld by wage earners. Every time you hear the term SE tax, know that it has nothing to do with the regular income tax. Instead, it alludes to Social Security and Medicare taxes.

Generally, self-employed individuals have tax obligations to file returns yearly, which are estimated quarterly. To know whether you should file self-employment tax, you first need to determine your net profit or a net loss. That is done by computing the total income and total expenses, then getting the difference between the two.

Provided you are working for yourself and earning a living, the IRS will want a share of that. One thing to remember is that when self-employed, you have access to lots of deductions to report.

Tax Return Forms for Self-Employed

Self-employed individuals can use different tax forms depending on the manner in which they work for themselves. We will look at various forms that you need to use depending on different scenarios, including:

  1. Freelancers
  2. Home business owners
  3. Home office

Here Are the Various Forms That You Need to Know About

  1. Schedule SE

The form that helps you file your self-employment tax, the equivalent of Medicare and Social Security taxes. Employed individuals normally have this tax withheld from their paycheck. Schedule SE is filed with Form 1040.

Schedule SE has both the Short and Long sections. At the start of the form, you can see a flow chart that helps you determine whether you fill the Long section. Self-employed individuals typically fill the Short section. The Long section is designated for church employee income as well as those who get wage income plus self-employee income. The long section gives you a chance to further elaborate on your sources of income.

Freelancers are required to file Schedule SE. if your earnings surpassed $400 from your freelancing activities, you should file this form. In the case where you have multiple businesses, it is not necessary to file multiple Schedule SEs. All you need to do is to combine the income from the different businesses to a single Schedule SE.

Please note that your SE income may be subject to another Medicare Tax of 0.9% in a case where the SE income surpasses certain thresholds:

  • Filing jointly as a married couple – $250,000
  • Filing separately and married – $125,000
  • Single and qualifying widow or widower – $200,000
  1. Schedule C

Schedule C is an essential form for those who work for themselves. The form helps you report income and expenses earned from your business and assists in determining profit or loss. 

While recording income, you should document all the payments that you got from clients. Documenting this entails varying amounts of gross receipts or sales, gross income, and gross profit. 

With regards to expenses, Schedule C lets you highlight the amounts of the expenses in several line items. You can have categories such as depreciation, advertising, auto, supply expenses, among others. 

  1. Form 1040, U.S. Individual Tax Return

The majority of the U.S. tax filers often use this form whether or not they are self-employed. Different factors determine if you should use the form, including your age, gross income, and filing status. 

Using Form 1040 can help with the itemizing of your tax deductions instead of using the standard deduction. It can help you gauge the tax credits you qualify for, even if you do not owe taxes.

  1. 1099-MISC Tax Form

You should obtain this form from each of your clients at the end of the year. It indicates the total amount they paid you for that year. Compare the amounts documented in Form 1099-MISC to your records for consistency confirmation. Keep in mind that clients file Form 1099-MISC with the IRS. Thus, you do not want there to be a significant discrepancy when they claim that they paid you more than what your records show. 

  1. Form 8829, Expenses for Business Use of Your Home

Self-employed individuals have the opportunity to claim the expenses incurred in their business if it is run in a home office. The condition is that you use this as your regular place of conducting business and that it is where you meet with customers, clients, or patients. 

If your home is the principal place of conducting business, you can use Form 8829 to claim these expenses such as insurance, repairs, mortgage interest, and utilities.

Tax Return Forms for Freelancers

Being a freelancer or a contractor means you are self-employed and you need to file tax returns. However, not all freelancers are self-employed. For instance, those running a home business have different tax forms than independent contractors. 

  • Schedule SE
  • Schedule C
  • 1099-MISC Tax Form

Tax Return Forms for Business Owners Working from Home

If you run a home business, the following forms may come in handy:

  • Schedule SE
  • Schedule C
  • Form 1120

Tax Return Forms for Business Owners With an Office

If you have a home office, the IRS Form 8829 is ideal for filing your tax returns.

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