Self Employment Tax Calculation – Calculating Your Taxes On A Quarterly Basis

As you become self employed you incur with it certain tax burden and it is a daunting task for you to calculate the self employment tax. But with little effort you can easily overcome that. Calculating the self employment tax, the first time for quarterly payment is always somewhat difficult and may take a bit of time. When you have calculated the self employment tax and made the payment for the first year it becomes rather easier to calculate the next time.Usually the self employed make payment two times in Social security and tax like Medicare which is not the case with the ones who are conventionally employed .This is because the employer contributes to the deposits for the conventionally employed. Though this is to some extent compensated as the self employed can reduce half of the amount from the income tax. But all these savings are realized only at the year end.When you are self employed you want to make sure that you are abiding by all tax laws but at the same time you also don’t want that you end up sending money to the US Treasury which is basically an interest free account. Deductions of course are taken into account.Legally you can get exemption for all your valid business expenses while you are calculating the self employment tax. So you can take into account wide range of expenses and write them off. The things can vary from mileage to expenses incurred in buying furniture or for that matter for availing services such as internet. But you have to have the receipts for all these expenses.The IRS treats all the self-employed to be a hybrid between employer and employee which truly speaking you are .All the self employed are required to make the self employment tax declaration three months so that they can keep themselves current as far as what they owe to the government is concerned . They should not wait till the end of year for that. It has been estimated that around 10 percent of people residing in US are self employed and pay self employment tax.This scheme is liked by many as you are not supposed to deposit a huge some as self employment tax at the end of year in April. But it has to ensured that you calculate the self employment tax as accurately as possible and making it sure that you are depositing as less money as possible each year. After all you don’t want your money to be refunded as Tax refund as it is not worth a saving option .There fore calculating the self employment tax as accurately as possible is of prime importance.Consider also that the IRS bases part of the likelihood whether you’ll be audited upon the percentage of the current year tax against the previous. So if you earn less than $150,000 make it you should ensure that you put in at least 100 percent of what was owed by you each quarter the previous year. Therefore prudent investment into the business is as important as carefully and precisely calculating the self employment tax