How to File a Self-Employed Tax Return

Any self-employed individual (an independent contractor, freelancer, or business owner, for example) who has earned more than $400 throughout the course of the year must file a self-employed tax return. (This figure is current for the 2009 tax year.)

If you fall into this category, aside from the standard 1040 form, you are required to complete the Schedule C and Schedule SE forms. Prior to completing the required tax forms, you should gather together all of the needed documentation. If you have received any miscellaneous income that has been reported on 1099-MISC (miscellaneous) forms, you will need those documents along with any other receipts or invoices that you have received throughout the course of the year. Your receipts, invoices or ledgers are used to help you calculate accurate income and expenses to be reported on the schedule C form. Once all your expenses have been deducted from your gross income, whatever is left is considered a net income. The net income is what you are required to pay taxes on. Employers normally withhold Medicare and Social Security from their employees' paychecks. Although you are no one else's employee, you are still required to pay Social Security and Medicare taxes. The self-employed tax form Schedule SE is used in order to pay those fees that would have been deducted from your income had you been employeed by someone else.

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