Freelancers, professional gamblers, independent contractors, business owners and self employed professionals of all kinds must pay their taxes, just like everyone else who works for a living. But the self employment tax is a little extra payment that comes along at tax time, just another lump sum that’s added to the income taxes every citizen of every government is required to pay.
The economy is down, work is hard to find and taxes are still going to be due at the end of the fiscal year. Looking for a little self employment tax relief this year? Don’t.
Self Employment Taxes
In the United States, the self employment tax rate is 15.3% of one’s total self employed income. This is a payment that must be paid in addition to ordinary income taxes which are due at the end of the fiscal year (the deadline for filing is April 15). Some of these self employment taxes go toward Medicare, Social Security and other government-sponsored programs. Professionals who work independently to earn their income must never let their thoughts stray too far from the eventual payout they must make. Remember that a chunk of all monies received will eventually go the government, no matter how inconvenient making such a payment may be.
Tax Relief for the Self Employed
The calendar years of 2008 and 2009 have been especially hard on workers of all kinds, and not just the self employed. But perhaps those who must constantly find their own work and know at all times they will owe the government a chunk of money feel this strain a little bit more keenly, especially as the months remaining on the calendar begin to get fewer and fewer. Is it possible that a little tax relief for the self employed will help alleviate some of the burden?
Don’t bet on it. The government is always going to want their cut on any income, no matter how that money was earned, at the end of the year. As for the self employment tax itself, chances of this rate being lowered in any way are slim to none. Everyone who earns an independent income has to pay for that income independently, though there are a few way to lighten the load.
Find a Little Relief from Self Employment Taxes
Don’t forget to make use of the system. There will probably be few, if any, government-sponsored relief programs in place to help alleviate the tax burden that self employed professionals will begin to feel in January 2010, but these workers are not without resources. Claiming business expenses (including miles traveled in the line of duty) and other monetary burdens of self employment is a good way to help lessen the yearly tax payout. Home office space, health care insurance costs, equipment purchases- all of it can add up to a smaller tax payment for the self employed.
Looking for some tax relief? Professionals will have to find their own, so keep track of all business-related expenses (even down to gas purchases made while traveling for the job) and save receipts. Remember that the self employment and income taxes which must be paid will, roughly, cost around $15 for every $100 earned. Keep this in mind, and always be prepared for the eventual tax payout that will follow.
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