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How do i determine the taxes [state, federal, etc] i need to…

Hi, how do i...

Hi, how do i determine the taxes [state, federal, etc] i need to pay as an independent contractor?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

What other information will you need?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Not sure

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Answered in 4 minutes by:
3/23/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,709
Experience: Taxes, Immigration, Labor Relations
Verified

For that purposes you will need to prepare your tax return.

Your first step is to fill schedule C

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

You will report here - gross receipt and deduct all your qualified expenses.

So when you have your NET business income - that amount is used for two purposes

-- calculate your self-employment taxes on schedule SE

https://www.irs.gov/pub/irs-pdf/f1040sse.pdf

and for income tax purposes on form 1040

https://www.irs.gov/pub/irs-pdf/f1040.pdf

Let me know if you need help with deductions.

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Customer reply replied 1 month ago
is there any other tax, such as state [NJ home office location]

Yes - your state income will be extra - as a resident of NJ - you will prepare your state tax return - and will be subject to NJ state income tax.

But you will need to have your federal tax return ready before moving to state tax issues.

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Customer reply replied 1 month ago
Hi. Do you know how/where I can determine my nj state income tax?

Your NJ income tax liability is determined on your tax return.

here is the form

https://cform.mwg.nj.gov/Download/DownLoadForm.aspx?AGENCY_DOCUMENT_ID=47

and instructions

http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf

If you just want to estimate your expected tax liability - you may use this tax rate schedule

http://www.state.nj.us/treasury/taxation/pdf/current/njtaxratesch.pdf

Let me know if that helps?

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Customer reply replied 1 month ago
Thank you. To confirm this would apply to an independent contractor? Is there any other tax, other than social security, Medicare, NJ income tax that would apply to an independent contractor. Also does it matter if wages are commissions?

If you are an independent contractor - all your income is self-employment income.

There is no wages in this situation.

If you hold a regular job - and getting wages - these are reported on W2 form.

On your self-employment income - deduct qualified expenses - and NET self-employment income is subject to social security and Medicare taxes - commonly referred as self-employment taxes

Then - you calculate federal and state income taxes.

That all you need to consider.

If you sell goods as part of your business activities - you would need to collect sales tax - otherwise - that is not your concern.

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Customer reply replied 1 month ago
Thank you. And to determine federal tax is per your instructions above (first reply)?

Yes - by preparing your federal income tax return - form 1040.

Lev
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Category: Tax
Satisfied Customers: 32,709
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