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1. I have earned salary for the year and now that I am self employed I will have a different income stream. Do I calculate my self employment income tax estimate based on total income or just the self-employment income. Logic says the latter, just not sure.
Self-employment taxes are calculated based on your NET self-employment income.NET self-employment income = gross self-employment income MINUS self-employment expenses.
ok, next - I work one job (consulting gig) at a time and it is not predictable how much work I am going to have in a quarter. Any suggestions on how to calculate estimated income for each quarter. Using historical trend is not viable since I can have swings of as much as 50%.
You need to estimate income for the year - not separately for each quarter.Your total predicted income MINUS total predicted deductible expenses.
hmmm...I thought you estimated quarterly? So I do it for the year and then divide by 4?
Is there a plain english guide I can get somewhere?
You pay estimate tax quarterly - but an estimation of your tax liability is done on the annual basis.
1. Your total predicted self-employment income MINUS total predicted deductible expenses.2. 15.3% on that net self-employment income will be your estimated self-employment taxes3. add all your income - estimate income tax4 add income and self-employment taxes - that would be your total estimated tax liability.
what is the self-employment SE tax now?
that is my last question for now...
15.3% on net self-employment income for estimation purposes.Self-employment tax is composed of a Social Security tax of 12.4% (on the first $113,700 for 2013) and a Medicare tax of 2.9% (no limit) - both are calculated on net self-employment income.
ok, I'm done for this round, thanks!