Self-employment Tax Rate For Freelancers in USA as Per Law

As per Taxlawsinusa, a freelancer in the USA, you’re considered self-employed and must pay self-employment tax on your net earnings from self-employment. Here’s what you need to know:

Self-Employment Tax Rate

– The self-employment tax rate is 15.3% of your net earnings from self-employment.
– This includes:
– 12.4% for Social Security (old-age, survivors, and disability insurance)
– 2.9% for Medicare (hospital insurance)

Net Earnings from Self-Employment

– Net earnings from self-employment include:
– Freelance income
– Business income
– Income from partnerships
– Income from sole proprietorships
– Net earnings are calculated by subtracting business expenses from gross income.

Self-Employment Tax Deduction

– You can deduct half of your self-employment tax as a business expense on Schedule C.
– This deduction can help reduce your taxable income.

Taxable Income Limits

– The 15.3% self-employment tax rate applies to the first $147,000 of net earnings from self-employment in 2024.
– Net earnings above $147,000 are subject to a 2.9% Medicare tax only.

Quarterly Estimated Tax Payments

– As a self-employed individual, you’re required to make quarterly estimated tax payments to the IRS.
– The due dates for these payments are April 15, June 15, September 15, and January 15 of the following year.

Annual Tax Return

– You’ll report your self-employment tax on Schedule SE (Form 1040).
– You’ll also report your business income and expenses on Schedule C (Form 1040).

Consult with a tax professional to ensure you’re meeting your self-employment tax obligations and taking advantage of all the tax deductions and credits available to you.

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