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Paying Taxes as an Independent Contractor You'll need to file a tax return with the IRS if your net earnings from self-employment are $400 or more. Along with your Form 1040, you'll file a Schedule C to calculate your net income or loss for your business.
You must use either one of two forms, a W-4 or a W-9, depending on whether you are hiring a new employee or an independent contractor. If you are hiring a new employee, you must have that person fill out a W-4 form. If you are hiring an independent contractor, you must have that person complete a W-9 form.
9 Form InstructionsLine 1 Name.Line 2 Business name.Line 3 Federal tax classification.Line 4 Exemptions.Lines 5 & 6 Address, city, state, and ZIP code.Line 7 Account number(s)Part I Taxpayer Identification Number (TIN)Part II Certification.
What is the Self-Employment Tax? The self-employment tax rate is 15.3% (12.4% for Social Security tax and 2.9% for Medicare). The self-employment tax applies to your adjusted gross income. If you are a high earner, a 0.9% additional Medicare tax may also apply.
9 Form InstructionsLine 1 Name.Line 2 Business name.Line 3 Federal tax classification.Line 4 Exemptions.Lines 5 & 6 Address, city, state, and ZIP code.Line 7 Account number(s)Part I Taxpayer Identification Number (TIN)Part II Certification.