Originally Posted by Aspen9184
(I'm not sure if this is where this belongs, so if I need to put it in a different board please let me know.)
I had a question pertaining to self employment taxes. My husband works full time making around 150,000 dollars a year. I am currently unemployed, but have been looking at getting into Amazon Mechanical Turk which is a crowdsourcing company. I have researched and found that this would be considered self-employment if I plan on earning over 400 dollars a year, which is my goal. The only concern I have is with self employment taxes. I have been reading that these taxes need to be paid quarterly. I'm not quite sure how to figure out how much I should be estimating my income to be and am also wondering if my husband's income in any way affects the amount of taxes I would need to pay. Just as a rough estimate we'll say that I plan on making 500 dollars quarterly on Amazon. I've looked at the IRS website and it just confuses me even more. We plan to file taxes jointly (next year when this would come into play) and we are wondering if the incomes are taxed at the same rate. Obviously if we're going to end up just using all the money I earn to pay taxes I'm just not going to do the Amazon position. Any help that you could provide would be greatly appreciated.
Thank you, Jill
In your case, it depends; ASLONGAS the amount reported on Sch C line 29/ 31 is $400 or exceeds $400 , you must file return as a self employer ALO aslongas the amount reported on Sch SE line 2 / 3 is also $400 or exceeds $400, you must pay SECA tax to the IRS; you can deduct 50% of the SECA tax you pay to IRS on 1040 line 27.however, you need to pay SECA taxes only up to your combined net earnings , $11370 for 2013, I guess. Net earnings means the combined self employment income reported o n SCh C line 29 / 31. However, you still need to pay 2.9% of Hospital insurance tax on yur combined net earnings even if it exceeds $113,700 for 2013.in general, If you are filing as a sole proprietor and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1K or more when you file your return;however, you do not have to pay estimated tax for the current year if you had no tax liability for the prior year; you were a U.S. citizen or resident for the whole year;your prior tax year covered a 12 month period. The Self-Employment Tax is how an independent contractor pays Social Security and Medicare payroll taxes. In the case of employees, the employer and employee split the cost of these payroll taxes, each paying 7.65% of eligible wages. An independent contractor, by contrast, is both the employer and the employee, so a self-employed person pays both halves, or 15.3% total.
The 15.3% self-employment tax is composed of a Social Security tax of 12.4% on the first $117,000 of net self-employment income (for 2014),$113700 fo r2013. and a Medicare tax of 2.9% on all net self-employment income. Starting in 2013, there is a new Additional Medicare Tax of 0.9% for higher-income earners. The $117,000 amount is called the Social Security wage base, and represents the maximum amount income from wages and net self-employment income subject to the Social Security tax. For Social Security wage limits for other years, see the article What is the Social Security Tax?
please contaxt an IRSEA/a CPA inyurlocal area for more info in detail.