Being self-employed means that no one paid your Social Security, Medicare or Federal taxes throughout the year! That means “you” are the one responsible for paying the taxes at tax time. For every dollar collected from you customers, you will owe IRS at least 25.3% in taxes at the end of the year.
It is a good idea to pay quarterly estimated taxes in to have those taxes paid “before” you file your annual tax return. All expenses incurred in doing business are deductible which will lower your “net” profit and will in turn, lower your Social Security, Medicare and Federal tax liability. Keeping track of your mileage instead of actual auto expenses will result in almost 3 times more deduction. This year’s mileage deduction is $ .575 per mile which means 60 miles will allow a deduction of $34.50 and the actual cost of gas would be about $10.00.
Give us a call for any questions you may have!!