California Self-Employment Tax: What Freelancers Need to Know

How do you pay taxes as a freelancer? 

Working as a Freelancers can be complicated. As an employee, there are various moving parts you don’t need to think about, plan for, or handle. However, when you are a freelancer, you have a lot of responsibilities placed on your shoulders. 

One of those responsibilities is the California self-employment tax.

When you are an employee, your employer must ensure your taxes are deducted from your paycheck. They are also responsible for paying employee taxes. 

However, as a freelancer, you must handle taxes on your own and ensure they are filed and paid correctly. If you need help handling your taxes as a freelancer, this short and simple guide is for you. 

What Is Self-Employment Tax?

Self-employment tax is Medicare and social security tax for self-employed individuals. If you make more than $400 annually in net profit, you must pay self-employed taxes. 

What Are Business Structures Taxable?

There are a few business structures that qualify for taxes for freelancers. These business structures are: 

  • Independent Contractor
  •  Sole Proprietor
  •  Part-time business owners
  •  Members of a partnership
  •  Partners with limited liability 

You must pay self-employment tax if you operate under one of these business structures.  

What Is the Tax Schedule?

Like all business taxes, you need to pay your self-employment taxes quarterly. You can estimate your annual amount and make a quarterly payment. The quarterly expense plan is as per the following:

  • Q1: due April 18th
  •  Q2: due June 15th
  •  Q3: due September 15th
  •  Q4: due January 15th of the next year

You can pay up to 25% of your annual estimated tax amount each quarter. 

How Do I File Self-Employment Taxes in California?

You can file your self-employment taxes in two ways. You can DIY your taxes or work with a qualified tax professional. If you need help with your taxes, consider contacting a company representing clients in tax disputes. 

What Deductions Do I Qualify For? 

According to California tax laws, freelancers can qualify for various deductions. These deductions include anything from internet and phone bills, home office supplies, meals, travel, and more. 

How Much Should I Budget for Taxes?

One of the best ways to pay taxes for the self-employed is to budget throughout the year.

California Self-Employment Tax: This Is What Freelancers Need to Know

You need to know several things about filing and paying California self-employment tax.

In a nutshell, self-employed freelancers have to pay a self-employment tax. Several business structures fall in this specific tax category. As a freelancer, knowing how to file, when to file, and the deductions you qualify for is essential. 

Budget for your self-employment taxes year-round to ensure you are not caught by surprise. 

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