A sole proprietor can cease business operations without much formal procedure, too. Unlike other types of businesses – such as partnerships, limited liability companies (LLCs), and S corporations – you don’t have to register or formally do anything special to form a sole proprietorship. TurboTax offers several features designed to simplify tax preparation and help users get the biggest possible refund. One standout feature I really like is the ability to import W-2s, 1099s and investment income reports directly from financial institutions.

Fill out the right tax forms

With the right version and a clear understanding of your needs, TurboTax can make filing your taxes a streamlined and stress-free experience. The desktop version is installed on your computer, allowing for offline access and local data storage. Both versions support state tax returns, though additional fees may apply. Self-employment tax, also known as SECA tax (Self-Employment Contributions Act tax), is a type of payroll tax that funds Social Security and Medicare. As a self-employed individual, you’re responsible for paying both the employer and employee portions of this tax, which can range from 12.4% to 15.3% of your net earnings from self-employment. The information provided on this website does not constitute insurance advice.

If someone paid you $600 or more for non-employee work, they’re required to send you a 1099-NEC. There are several discounts and free filing options available for those who qualify. USAA members can access exclusive savings when purchasing TurboTax through the USAA website.

If you operate your business from home, you can take the home office deduction. To qualify for this tax deduction, you must use part of your home for business exclusively, and on a regular basis. You can’t take this tax deduction if you work from home occasionally. Below is more information regarding the TurboTax Premium  tax deductions for some of the most popular careers. When you’re an employee, you share that cost with your employer, with each of you paying a share of the FICA tax. Your share is automatically taken out of your paycheck so it doesn’t typically show up on your tax return.

  • Work-related expenses reduce your taxes by lowering the amount of self-employment income you get taxed on.
  • State individual income tax varies by state, though some states don’t have it.
  • Once you find the right insurance coverage for your small business, you can begin coverage in less than 24 hours and download a certificate of insurance (COI).
  • As a first-year sole proprietor, you’ll need to report your business income and expenses in addition to your personal income tax return.

Doing self-employed taxes can be complicated, especially if you have multiple sources of income or run a business. While you can go the DIY route, using tax software (like TurboTax Premium), a tax professional can ensure accuracy. Both the self-employment tax and the 50% deduction are calculated on Schedule SE.

The online version offers the flexibility of accessing your tax information from any internet-connected device, with data securely stored in the cloud. You can switch back and forth between TurboTax online and the app seamlessly. Selecting the right TurboTax option depends on your tax situation.

If you have a traditional job, you may also need to include other forms, such as Form W-2 when you prepare your tax return. State individual income tax varies by state, though some states don’t have it. You’ll need to pay income tax (federal and possibly state) and self-employment tax. If you expect to owe $1,000 or more in taxes, you may need to make quarterly estimated tax payments. You also have to pay federal income tax, which is based on a marginal tax rate.

Let an expert do taxes for you, start to finish

  • However, even if an LLC elects to be treated as a corporation for income tax purposes, an LLC with only one owner will still be considered a sole proprietorship for employment and certain excise taxes.
  • Whether our experts prepare your tax return or you do it yourself, guarantee our calculations are always 100% accurate, or we’ll pay any penalties.
  • If you’re responsible for collecting sales tax, you probably have to register with your state, too.

Work-related expenses reduce your taxes by lowering the amount of self-employment income you get taxed on. For example, if you made $50,000 in self-employment income and had $5,000 out-of-pocket expenses, you’d only get taxed on $45,000. If it’s directly related to the work you do, you can deduct it as an expense. See the following section for a list of common expenses most self-employed taxpayers will want to review. You can claim 67 cents per mile for business miles driven in 2024 or 70 cents per mile in 2025, plus the cost of parking and any tolls you paid.

Try the self-employment tax calculator for deductions now and learn more about what write-offs you might be eligible for. You calculate your self-employment tax on Schedule SE and report that amount in the “Other Taxes” section of Form 1040. In this way, the IRS differentiates the SE tax from the income tax. When you start a small business and you do not incorporate or form a partnership, you typically report the results of your operations on Schedule C and file it with your Form 1040.

How is Self-Employment Tax Calculated?

Knowing your status (e.g., head of household, married filing jointly, or single) can help you file self-employed taxes accurately. The free version is designed for simple tax returns and may not cover more complex situations like itemized deductions or certain types of income. For those seeking additional help, TurboTax Live connects users with tax experts for real-time assistance.

If you want to do your own taxes with unlimited expert help as you go, choose TurboTax Live Assisted Premium. Or have a dedicated expert do your self-employment and investment taxes for you with TurboTax Live Full Service. With 3,429,113 members and countless tax experts, we’ve got your question covered. Maximize unique deductions across diverse industries like real estate, delivery driving, specialty-trade construction, and more. You should receive a 1099-K if you made more than $5,000 on one of these platforms. Form 1099-MISC or 1099-NEC reports money you earned doing work for a client or for a company as a nonemployee.

A local tax expert matched to your unique situation will find every dollar you deserve and get your taxes done right – as soon as today. All features, services, support, prices, offers, terms and conditions are subject to change without notice. Whether our experts prepare your tax return or you do it yourself, guarantee our calculations are always 100% accurate, or we’ll pay any penalties. As a self-employed taxpayer, you’ll also see some new forms on your tax return. Ultimately, the goal is to simplify your tax season — not add unnecessary costs.

Create employer forms in minutes

Depending on which credits you’re claiming, you may need to file additional forms specific to those credits with your tax return. Learn about deductions for your home office, health insurance premiums, car expenses, and more to reduce your taxable income. If you’re self-employed, chances are you’ll have to pay taxes on your earnings. This includes self-employment tax (Medicare and Social Security taxes), federal, and sometimes state income tax.

You can’t write off these expenses if you’re not self-employed — for example, if you’re a household employee who was hired through an agency. You can make contributions up until the extended October 15 tax deadline (if you file an extension). Compare that to the cap on IRA contributions—$7,000 ($8,000 if 50 and over) for 2024 and 2025. These traditional IRA contributions also must be made by the April 15 tax deadline, even if you have filed an extension. Also note that there are limits to how much of your income is subject to the Social Security part of the self-employment tax. For 2024, the first $168,600 of your combined wages, tips, and net earnings from self-employment is subject to the Social Security portion (increasing to $176,100 for 2025).

Before filing with TurboTax, it’s important to know that not all versions are free. While this tool can boost refunds, it may occasionally encourage upgrades that aren’t necessary for every tax situation. 💡Learn more about the top deductions for self-employed individuals. If you want to deduct travel and meal costs, it’s important to keep your receipts.

​With TurboTax Live Business, get unlimited expert help while you do your taxes, or let a tax expert file completely for you, start to finish. Get direct access to small business tax experts who are up to date with the latest federal, state and local taxes. Small business owners get access to unlimited, year-round advice and answers at no extra turbotax self-employed cost, maximize credits and deductions, and a 100% Accurate, Expert Approved guarantee.

Self-employment tax deductions based on your career

Profit and prosper with the best of Kiplinger’s advice on investing, taxes, retirement, personal finance and much more. TurboTax takes much of the complexity out of tax preparation by offering a guided, user-friendly experience that supports a wide range of tax situations. If your tax situation involves freelance work, rental properties or investment income, you’ll likely need to upgrade to a paid version, such as TurboTax Premier or TurboTax Premium. While TurboTax simplifies the tax filing process, there are a few considerations to keep in mind.