Everyone knows that they have to pay taxes. For people in the US this includes federal, state, Medicare and Social Security. It may also include other things such as local taxes depending on where they live. A person that works for someone else will see a certain percentage automatically removed from their paycheck to cover these taxes. A self-employed person has to take care of these taxes themselves. Utilizing a program such as TurboTax can make this task much easier for anyone.
Social Security and Medicare taxes together equal to 15.3% of a person’s yearly income. When a person works for someone else, the boss covers 6.2% of the Social Security. As a self-employed individual they are responsible for the entire amount.
By using TurboTax any self-employed individual is guaranteed to file their taxes correctly. The software will ask for either a w-2 or 1099 at the beginning. If the 1099 is chosen then TurboTax knows automatically that this is a self-employed individual. It will then automatically calculate the Social Security and Medicare taxes for the user.
Another useful feature is that the software will ask for you any business deductions that you may have. For a self-employed person this can include equipment such as computers, phones, fax machines, or Internet service. The software will walk you through the entire process to help you make sure that you get all the deductions that are you entitled to.
TurboTax will also warn you should you miss important things such as placing zero in for the amount of your tax. A warning box will appear informing you that such an entry increases your chance of audit. Such warnings help anyone to ensure their taxes are filled out correctly and accurately before they are filed.
Turbo Tax for the Self-Employed by Steve