Self-Employment Tax Breakdown | How Self-Employed Taxes Work

Keeper is delightfully smart tax filing software that’s especially useful for people with 1099 contracting & freelance income. Connect your bank to automatically uncover tax breaks & personalize.

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In this video, we’ll break down why taxes for freelancers, gig workers, and independent contractors are so high — and why you should always be claiming tax write-offs to lower it.

The first year folks file self-employment taxes, the most common reaction goes like this: “Holy cow, that’s a lot!.” That's because, unlike with W-2 taxes, there’s no money withheld automatically from your 1099 earnings. That can lead to a tax bill that’s downright... scary.

There are three parts to your 1099 tax bill: the self-employment tax itself, federal income tax, and state income tax. The most important of these is the self-employment tax, currently at 15.3%.

If you’ve ever wondered why 1099 tax rates are so high compared to what you see from W-2 employees, you can thank the self-employment tax. It covers Social Security and Medicare. For people working W-2, their employer pays for half of this. But if you're self-employed, you're responsible for all of it.

To make things more complicated, you’ll owe taxes on your self-employment income even if you make less than the standard deduction of $12,000. But, good news! You can always take itemized business deductions ON TOP OF the standard deduction. It’s the key to lowering your tax bill to a reasonable level.

TIMESTAMPS

0:00 - Intro
1:10 - W-2 income taxes
1:39 - Your 1099 tax bill
4:34 - 1099 taxes and the standard deduction

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#SelfEmployed #Freelancer #TaxDeductions

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COMMON TAX WRITE-OFFS

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OTHER VIDEOS TO WATCH

[makaylahanson]

"omg, that's a lot of money" is exactly my reaction when I saw mine this morning . that is exactly why I am here, watching this entire series, so the girls can know what they need to know to make & save the most money with our taxes.

[ItsKayleneJ]

First time 1099er... this was so helpful. 1. I was so lost about what I should be putting aside for taxes. 2. Once is used the tax calculator I was flabbergasted at the amount I would need to put aside monthly ... Took a huge chunk from my budget so now I need to learn what can be write offs. Thanks !

[AmakaYere]

Where were you two years ago?! Everything was presented in such clear manner! Subscribed!

[theanadevine]

This is the best tax information I’ve ever received, and a genuinely fantastic video. I’m like, spellbound.

[tpeace]

Very helpful information and easy to comprehend!

[dannyboimcnair]

Thanks sis that was helpful straight up!

[chessoptics]

Are you available for business calls? About the presented information?

[evelynrodriguez]

Can you make a video of business write off? I need to know what that list is

[keykey]

I been thinking if i should take a 1099 independent contractor job, but i need some answers and guidance.

1) You think is worth it to take a 1099 job and being a single tax filer person with no dependents OR is more convenient to work as a w2 employee and being a single tax filer person with no dependent s ? ? - 1b) and why ? ?


2) Around how much money(starting at around what number range) should i make a week and an hour to make it worth it to work as a 1099 worker and being a single tax filer person with no dependents ? ? .


3) If i work from home remotely(no travel out of my state) i should make sure that the company that hires me is based in my state ? ? so i donot get taxed in more than one state. - 3b) where is a completely remote based company's employee taxed ? ?, is the remote employee taxed based in the state that the employee lives ¿? ¿? .

[yesquired]

What effect do personal expenses have on taxes? What is the significance and other examples of personal expenses?

[abreafrierson]

So I also learned the difference between the 1099 and W-2.. with 1099 paying taxes or do we received any refund within their ?.. I'm new to the 1099 and freelancing contractors

[LikeAStarrx]

What happens when you WFH? A lot of people were hired in one state and then moved back home during COVID, do they get state taxed in both states? Also what if you're hired in one state but travel frequently (ex: hired in LA but travel often to NYC, MIA, NOLA) do you have to pay taxes for all of those states?

[ivankirkacayan]

I was hoping you can help me out. I sold tickets on Stub hub and since I exceeded the threshold of $600, I will be getting a 1099-K. Should I factor the 3 taxes you mentioned (Self employment tax, federal tax (to my tax bracket), and state tax) to prep how much I need to put aside or tax season?

For example:
Purchased tickets and profited $876.73.

[Kdiamondgoddess]

Hi, thank you for this information on self employment taxes. I have a question, what if you didn't make more than 400 on your start up year of business do you still have to file a tax return?

[lupeleal]

Do we estimate taxes on Pension and Social Security too?

[abreafrierson]

I made over a thousand so I'm not even sure what that means does it mean owe get that money back ?

[kimmello]

I work for doordash. I made 3500 last year but I'm also on disability and widows benefits. Does this change anything

[madelinedoyle]

Love how everyone wants to save on taxes, but then it's bad for the people who make a lot of money .. just saying.

[dennygreenwood]

Great Info!! Thank you for the education.