• August 16, 2016
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They say, “ignorance of the law excuses no one”, and the maxim also stands true for self-employed professionals. Tax laws impose stiff penalties on those who fail to honor their tax liabilities, which is why it is essential for self-employed professionals to familiarize themselves with all applicable taxes. While some engage in acts of creative accounting, others find themselves in the same category due to a lack of information, and therefore, at odds with the law. Let’s take a look at who fits into this category and the precise obligations entailed.

Who is Self-Employed?

According to Internal Revenue Services (IRS) U.S, you are considered self-employed if you fulfil any of the following conditions:

  • You do business as a sole proprietor or an independent contractor
  • You are in partnership that carries on a trade or business
  • You are doing a part-time business

Applicable Taxes

Self-employed Income Tax

As a self-employed individual, you are required to file an annual return and pay estimated quarterly taxes if your net earnings as self-employed exceeds $400. Self-employed income tax, a social security and medicare tax, is also applicable on the income you receive from part-time work, besides the income from your primary occupation. If, however, your earnings are less than $400, you may still file a return if you fulfil the requirements listed in Form 1040.

Schedule C or C-EZ

Whether you earn profit or loss, you are required to file a schedule C, or Schedule C-EZ for Net Profit, along with Form 1040. You may also use Schedule C-EZ if you have expenses less than $5,0000 and meet other conditions.

Self-employed Tax

Self employment taxes are applicable even if you are leveraging Social Security or Medicare benefits. Use Schedule SE (Form 1040) Self-employment tax to figure the tax due on your net earnings from self-employment. To file self-employed tax, attach the specific schedule to your federal tax return.

Estimated Tax

If you are self-employed, you are expected to make estimated tax payments. Estimated tax is a method to pay income and self-employment taxes along with other obligatory taxes. Estimated taxes are usually paid in four quarterly installments and failure to pay enough taxes throughout the year may attract a penalty. In fact, you are required to pay estimated taxes even if you have a refund due on your tax return.

Allowed Deductions

As a self-employed professional, you are allowed a certain amount of deductibles from your business expenses – both ordinary and necessary. Ordinary expense are those that are typically related to your specific industry and necessary expenses are the ones that are helpful for your trade or business. Typically, you are allowed to deduct business expenses in the same year you paid them.


Whether you file your taxes as a sole proprietor, independent contractor, or a partnership, you are liable to pay certain taxes to both federal and state governments. Moreover, if you have employees on your payroll, you may also have to pay standard payroll taxes. Though we have covered the taxes a self-employed person is liable to pay, you need to be careful with the paperwork, as even a small error may lead to a big problem.  Should you need help exploring all of your options to resolving your IRS tax problems please call The Law Offices of Nick Nemeth and schedule a free consultation. Call us at (972) 426-2553 or fill out our contact form.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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