California Self-Employment Tax: What Freelancers Need to Know

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Are you wondering how to pay taxes as freelancers? 

Working as a freelancer can be complicated. As an employee, there is a variety of 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 is required to ensure your taxes are deducted from your paycheck. They are also responsible for paying employee tax. 

However, as a freelancer, you need to handle taxes on your own and make sure they are filed and paid correctly. If you are not sure how to handle 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. Currently, if you make more than $400 per year in net profit, you have to pay self-employed taxes. 

What Business Structures Are 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 

If you operate under one of these business structures, you have to pay self-employment tax.  

What Is the Tax Schedule?

Like all business taxes, you need to pay your self-employment taxes quarterly. You can do this by estimating your annual amount and making a quarterly payment. The quarterly tax schedule is as follows:

  • 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 have problems with your taxes, consider contacting a company that represent clients in tax disputes

What Deductions Do I Qualify For? 

According to the California tax laws, freelancers can qualify for a variety of deductions. These deductions can include anything from internet and phone bills, your 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

There are several things you need to know 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, it’s essential to know how to file, when to file, and the deductions you qualify for. 

To ensure you are not caught by surprise, make sure to budget for your self-employment taxes year-round. 

Don’t forget to browse our site for advice on health, travel, technology, and more. 

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