If you work for yourself and don't call anyone your boss, you're likely self-employed. This carries advantages, like not having a manager and deciding your own hours. But it also comes with trade-offs, like paying the self-employment tax and paying for your own employee benefits.
Some examples of self-employed occupations include:
Work at your
Being self-employed and being an employee aren't mutually exclusive. You might work a day job and pick up side jobs as a freelancer or independent contractor.
Self-employment comes with a different tax situation
than working as an employee. You'll need to ...
You can calculate your marginal tax rate and find out approximately how much tax you’ll owe for the year. Estimate your tax rate and set aside at least that much for income taxes. Set aside income for self-employment taxes, too. For example:
If your marginal tax rate is
and self-employment taxes come to
set aside at least
of your net income from self-employment.
You'll divide up and pay this balance each quarter over the course of the tax year. Send the IRS your quarterly payments by: