If you are self-employed and this is your first tax season trying to figure out the specifics of filing your income taxes, it's time to work with a tax return filing service to get you the best potential outcome for your income taxes.The various forms you need to file, deductions that are acceptable, and your final gross adjusted income can be hard to calculate when you haven't had any experience filing as a self-employed individual. To complicate matters further, if you have a job where you also have W-2 income, figuring all of your income out to determine what taxes you need to pay can take you a long time.
Your First Year in Self-Employment
When you receive any 1099 forms from places where you worked as an independent contractor, this is all self-employment income. The money you receive is gross income, and when you file a self-employment tax return, you will work with your adjusted gross income to figure out what taxes you are going to pay. Your adjusted gross income is your total money received with your expenses deducted. For example, if you run a store and sell $10,000 worth of merchandise. You didn't net $10,000. The cost of the merchandise will be subtracted from the $10,000. What is left is your profit. Adjusted gross income is your actual earnings, and not just the total amount your business brought in.
When You Pay Taxes Through a Part-Time Job
If you work a part-time job and you are self-employed part of the time, you will be able to put in your W-2 wages on your tax return as well. You will put in the taxes you have paid and your earnings as reported on your W-2. This can be added to your adjusted gross income once you determine what that is. When you are a sole-proprietor and only use your social security number for any work that you do, this makes it a little easier to complete one tax return for any work that you do throughout the year. Your taxes paid from your part-time job might offset some of the taxes you owe from your self-employment.
When you work with tax return filing services, the confusion of trying to do your taxes as a self-employed person can be cleared up for you. There will be someone who prepares your return, and files it for you after you review and sign the return.