Whether you’re getting started, having an established business, or trying out a side-gig, Turbo Tax for Self Employed is designed for the unique needs of self-employed and small business owners.
TurboTax Self-Employed searches for deductions personalized to you and your line of work.
They’ll help you claim industry-specific tax write-offs to help you get back every dollar you deserve.
No two people are alike. That’s why industry-specific deductions are personalized to your line of work and your unique situation, so you can keep more of the money you earn.
The software covers industries like rideshare, real estate, delivery driving, online retail, professional consulting, and more.
Why Are More People Becoming Self-Employed?
There are many benefits that come with being self-employed, which is part of the reason so many people are now doing this.
The first key benefit is the ability to earn far more money than you would when working for someone else.
When you work for yourself, the challenging work you put in can pay off – literally.
Before you take your first step into the world of entrepreneurship, there’s a checklist of things you’ll need to do to avoid tax problems while your venture is still in its infancy.
Who Pays Self-Employment Tax?
- You carry on a trade or business as a sole proprietor or an independent contractor.
- You are a member of a partnership that carries on trade business.
- You are otherwise in business for yourself (including a part-time business).
Anyone who starts their own business eventually needs to learn how to file taxes as a self-employed worker.
The alternative, not filing taxes and seeing your back taxes bill balloon over the years, isn’t pretty.
What Is Self-Employment Tax?
Self-employment tax is a tax made up of Social Security and Medicare taxes.
If you work for yourself, you pay this self-employment tax in lieu of having a company withhold Social Security and Medicare taxes from your paycheck.
You may also need to pay a self-employment tax if you earn more than $400 working for yourself.
The IRS says you must file an income tax return if your net earnings from self-employment were $400 or more.
However, if your net earnings from self-employment were less than $400, you can skip paying self-employment taxes on that amount even though you must still report those earnings.
Know Your Entity
One of the most important decisions you must make as you start your journey toward self-employment is determining what your business structure will be.
Whether your company will be a sole proprietorship, an LLC, a partnership, an S-corporation, or C-corporation will affect how your taxable income flows through to your personal tax return.
TurboTax Online Home & Business is now TurboTax Online Self Employed. These changes are being made to make the filing process and running a business easier for the self-employed filer.
The self-employed sector is growing. About 16 million workers in the U.S. are self-employed.
Americans are finding they love the control, independence, and freedom from the routine that being self-employed gives them.
We want to help in supporting these dreams.
Self-employed customers work for themselves and provide a service or food to another individual or a business. Most work part-time, full-time W-2 employment.
The IRS requires them to file as self-employed/as a business because they have income on these forms which will generate the correct forms in TurboTax for filing their business.
They are often paid with:
1099-MISC form (instead of a W-2) especially with box 7 income
1099-K form for Payment Card and Third-Party Network Transactions. Those who receive a Form 1099-K (Payment Card and Third-Party Network Transactions) are sometimes confused about what this form is and if they need to enter it into TurboTax.
Cash, often without any tax form received and they may keep their own records concerning their payments. Many use our QuickBooks products to track this information!
Examples of self-employment income include:
On-Demand services like Uber, Lyft, Task, Rabbit, etc.
Self-Employed vs Employee
The major differences for self-employed files are:
- No taxes are taken out at the time of payment because the filer is not employed by anyone. They are their own business.
- They pay an additional tax called self-employment tax, which will cover social security and Medicare tax.
For their self-employed customer base, about ¼ of them will owe taxes.
This will calculate in TurboTax and will affect the tax due/refund amount differently than a w-2 employee’s return with no self-employment.
Many are shocked that they owe taxes. Turbo Tax can help customers through this by empathizing with their situation.
Self Employed and Home and Business are only available through TurboTax.
Personal & Business is the best solution for self-employed taxes.
TurboTax will explain why the filer has a higher tax due (or lower refund) through a feature called explaining why.
Turbo Tax wants to help self-employed customers by showing them other Intuit products that can be helpful in successfully running their business.
Money-saving deductions– By categorizing transactions, customers may find potential tax deductions that could cut their tax bill by 36%.
Easy quarterly taxes – We do the math to help you set money aside for worry-free quarterly taxes. No more year-end surprises.
Finances made simple – Untangle your business and personal expenses on the go. Use the mobile app to track your income with a swipe. A quick picture is all it takes to keep every receipt at your fingertips, so you don’t have to worry about losing them.
Effortless invoicing – Create and send professional invoices quickly on the go. Get paid faster by enabling online payments.
Track mileage automatically– Automatic mileage tracking means automatic deduction tracking – an average of $7,393 in potential mileage deductions per year.
TurboTax Self-Employed will ask you simple questions about your life and help you fill out all the right forms.
Perfect for independent contractors and small businesses. They’ll search for over 500 tax deductions to get you every dollar you deserve and help you uncover industry-specific deductions.
Now, that I’ve concluded what Turbo Tax for the self-employed product is. Hopefully, you can make an informed decision about the best way to file your tax return as a self-employed entity.
Do you file your taxes on your own or do you hire someone to do them for you? Leave your comments in the comment section!
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