Question

New to self employment taxes

Forum|Forum|4 years ago
October 27, 2021
1 reply
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Hello,

Last year was my first time filling self employment taxes and it was not fun. I owed a lot back. So I want to make sure I am more prepared this time. As background, I do side hustles like DoorDash, instacart, and researching others. Below are my questions:

What percentage of what I earn should I be putting away for taxes?
What counts as a deduction? Last year I didn’t have any and feel like that also probably hurt me.
Are there other fees, charges, or information in general that I should be aware of that I didn’t ask?

thank you!

C

conniem123

Your self employment taxes are based on your business profit. Here is a great article with an example for you to calculate an estimated tax.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/the-self-employment-tax/L8xXjolB4

Generally, a business expense must be ordinary and necessary to qualify for a deduction. Some common deductions can include communication costs, office supplies, licenses or permits, mileage, advertising costs, professional fees, liability insurance, banking fees, and health care premiums.

What self-employed expenses can I deduct?

What can I expense or depreciate with the business safe harbor election?

There are two ways that you can deduct the business use of your vehicle. Either the Actual Expense method, or Standard Mileage method. TurboTax will help you calculate your business vehicle expenses each way and then recommend the method that gives you the largest deduction.

Can I deduct mileage?

TurboTax + Uber: Tax Tips for Uber Drivers [Webinar]

I hope you find this information helpful!

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J

Judith1195Author

Thank you! In regards to the tax portion, so I set aside for social security and Medicare. To that do I then add my state tax? I saw people generally recommend to set aside 20%, I just wasn't sure where the remaining percentage comes from.

C

conniem123

Yes, you may set aside money to pay your state tax. Your state tax will not include the self-employment tax portion, only the state tax on the business profit.

The state tax percentage will depend on the state you file, and can find the state tax rate on your states Department of Revenue website.

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