Will 2015 be the year when you take the leap into self-employment? Even if you’re going to start out small with an office in a spare bedroom, there are some important tax issues you should keep in mind before you take the plunge. The Pennsylvania Institute of Certified Public Accountants offers answers to some common self-employment tax questions.
What’s the Self-Employment Tax?
When you strike out on your own, tax considerations can get a little more complicated—and potentially more expensive. For example, the self-employment tax will loom large in your plans. You will now have to pay your entire Social Security and Medicare taxes each year instead of splitting them with an employer. The good news is that you can deduct 50 percent of those self-employment taxes from your net income.
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