Want to know what you will be taking home as a self-employed person? We have a helpful online calculator to discover your taxation rate.
People who are self-employed often have a different taxation system to regular employees or business owners. Depending on how much you are earning in gross income as a self-employed person in business, you will want to know how much tax you are earning. Thanks to our self-employed income tax calculator, as part of our business calculator series, we have you covered. To calculate your income tax as a self-employed person, you will have to adjust our calculator to your country’s taxation system.
With the American taxation system rate set to default, you can just enter your country’s income tax rate and additional self-employment tax rate if applicable.
How much tax do you pay when self-employed?
The amount of tax you are charged as a self-employed person depends on the country you operate in. The tax rate for the self-employed in the United Kingdom is, as of 2020, 20% of your income. It is thus similar to being an employee. The key difference is that you are not subject to a Retention (or Witholding) Tax, as an employer-employee relationship would be.
As of 2020, in the United States the self-employed tax rate is 15.3%. This is constituted of the 12.4% Social Security tax and an additional 3% for Medicare. However, your social security tax in the United States will depend on your income bracket.
How to calculate self-employed income tax with our calculator?
Our calculator asks you to put in the following parameters into the required fields :
- Your gross income from business activities as a self-employed individual refers
- The self-employed income tax rate in your country, as a percentage.
- The tax bracket status, which you determine based on your income.
- You add social security tax rate in your country, if applicable
- Hit the “calculate” button
Do I file an individual tax return for the self-employed?
Depending on the country, you may have to take out several different tax return forms or you simply declare your self-employed status within your regular tax return.
In the United States, you must declare your self-employment revenue separately in order to pay Medicaid and Social Security taxes. In the United Kingdom you will do the tax return all in one document.
Is self-employment tax the same as income tax?
In the United States, you pay both income tax and self-employment tax. This is because your self-employment tax refers mostly to Medicare and Social Security tax, that is similar to what businesses pay as part of the Retained or Withheld Tax, which you can #calculate here#. Your income tax will be dependent on your net income after this. As such you have to file an independent income tax form as if you were an individual.
In the United Kingdom, the two concepts are the same. Self-employed people simply have a slightly different income tax rate to the average employee depending on income and status.
Can you file taxes for free if you are a self-employed person?
In the United States your tax forms will be provided free of charge.
In the United Kingdom you have to pay a Self-Assessment Bill if you do your own tax return on your self-employed status.
