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Self-Employment Tax Deduction
- Calculating your self-employment tax deduction involves steps. You can deduct half of your self-employment tax payment. This reduces taxable income.
Tax Advantages for Rideshare Drivers
- Working as a rideshare driver has tax advantages related to deductions for business use of your car. Expenses used as deductions include vehicle cleaning, passenger amenities, maintenance, parking, and tolls.
Setting Aside Money for Self-Employed Taxes
- To calculate your self-employment taxes, take your net self-employment income, which is income minus deductible expenses, and multiply it by 0.9235 (92.35%). Then multiply this number by the FICA tax rate (15.3% for 2022) to arrive at your estimated self-employed tax.
How to Calculate Self-Employment Tax
- To calculate self-employment tax, take net self-employment income (income minus deductible expenses) and multiply it by 0.9235 (92.35%). Then multiply this by 15.3% (the 2023 FICA rate) to get estimated self-employed tax. You should set aside 25% to 30% of taxable freelance income quarterly to pay taxes.
Filing Taxes for Self-Employed Individuals
- To file taxes as an independent contractor or freelancer, simply send the completed forms to the IRS for filing. The address varies based on the state you live in and whether or not you’re including a payment with your submission.
Freelancer Tax Deductions and Payments
- Standard deductions in 2023 are $12,400 for single taxpayers and $24,800 for married couples filing jointly. Deductible expenses for self-employed individuals include vehicle costs, supplies, health insurance, and retirement contributions. Consult an accountant for a complete list.
Self-Employment Tax Overview
- The self-employment tax is a Social Security and Medicare tax that applies your income as an independent contractor. The amount of money you pay in self-employment taxes depends on how much business income you have in a given year.
Additional Information on Self-Employment Tax
- 2023 self-employment tax is 15.3% up to $142,800 and 2.9% above. Use Schedule C for net earnings and Schedule SE for taxes owed. Half the self-employment tax is deductible. Rideshare drivers deduct mileage, vehicle cleaning, amenities, maintenance, parking, and tolls.
