When to Pay Self-Employment Taxes

Individuals who are considered must still pay taxes. Self-employment taxes are contributions made to Social Security and Medicare, generally through quarterly payments known as estimated tax payments.

applies to anyone who makes $400.00 or more. In these cases, the taxpayer must file a (Form 1040) to pay self-employment taxes, since withholdings are not taken on their income.

Self-employed taxpayers meet any of the following conditions:

  • They are a sole proprietor or independent contractor for a or trade.
  • They are a member of a business or trade partnership.
  • They conduct business on behalf of themselves.

Definition of Business and Trade

Business or trade is considered when one performs services as a means of making a profit. Each situation is different when it comes to determining what is classified as a business or trade. How often you perform the service and the regularity of transactions are important in determining if your activity is a business or trade. You aren’t required to make a profit in order to be considered self-employed, however, you must be attempting to profit and further the business.

Part-time Businesses

You don’t have to perform your services or activity full-time to be considered self-employed. You can work full-time as an employee of another company, and still have a part-time business that falls under the self-employment guidelines.