JERSEY CITY, N.J, Feb. 6, 2018 / PRNewswire
The number of Americans working in the sharing economy is growing fast – meaning more people are required to pay self-employment taxes. To avoid being surprised at tax time, remember that income taxes are not withheld automatically from this income and, if you expect to owe tax of $1,000 or more, you are required by the IRS to make estimated tax payments each quarter. The IRS establishes the quarterly tax schedule, and there are penalties and fees associated with underpaying estimated taxes at both the federal and state levels.
"If you're not sure where to start when determining how much estimated tax to pay, Jackson Hewitt is here to help," says Alan D. Ferber, CEO of Jackson Hewitt. "Estimated tax is something self-employed workers need to know since prepaid taxes aren't deducted from paychecks as they are for many Americans who receive a W-2."
Individuals who earn $600 or more in self-employment income can expect to receive a 1099-MISC Form, or a 1099-K Form if the earnings were received through a third-party system. If a 1099-MISC is not available, the income must still be reported.
"There are a variety of tax benefits and deductions available to self-employed individuals," says Mark Steber, Chief Tax Officer of Jackson Hewitt, "but you must qualify for the deduction before you can claim it. Tax pros at Jackson Hewitt know you work hard for the money you earn and will find every deduction and credit available for your unique tax situation."
Below are some of the common tax deductions available to self-employed individuals:
- Cell Phone
If you use a cell phone as part of your business, this could be a big deduction for your business. Be careful not to make the mistake of mixing business with pleasure; you will need to keep detailed records.
- Home Office
If you dedicate part of your home for business purposes, you can deduct the portion of your household expenses that relate to your business operations.
You can deduct travel expenses and 50 percent of related meals and entertainment if the travel and meals are directly related to your business.
- Car Expenses/Mileage
You can write off either the actual expenses for business driving – gas, oil, tolls, and repairs, or claim the standard mileage rate for all the business miles you drove.
- Fees, Dues, Subscriptions
Annual fees are common costs of doing business and are deductible.
You can claim office-related expenses, including software, stationery, photocopies, and any other consumables needed to run your business. Don't forget to claim your business expenses, such as supplies needed to do each of your jobs.
- Health Insurance Premiums
If you're self-employed and not eligible for an employer-sponsored health plan through yours or your spouse's job, you may be eligible to write-off your health insurance premiums on your taxes.
For help understanding your self-employment taxes, visit a Jackson Hewitt near you.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead with Maximum Refund and 100% Accuracy Guarantees. With close to 6,000 franchised and company-owned locations, including 3,000 in Walmart stores, and online and mobile tax solutions, Jackson Hewitt makes it convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.JacksonHewitt.com or call 1 (800) 234-1040.