Taxes for Independent Contractors

Written By Amber Petty 10/4/2018
Independent contractors or the self-employed are in an unusual tax situation. We don’t have an employer withholding tax for us from each paycheck. We are responsible for paying that tax ourselves. This includes federal and state income tax as well as Social Security and Medicare. When we are employed, our employer keeps back that portion of our income and gives it to the IRS quarterly in our name. As independent contractors or self-employed business owners, we should be doing this ourselves.

The amount of federal and state tax is an amount that is different for everyone based on our family situation and income. There are estimators that can be used to help figure out how much that amount would be for you. The Social Security and Medicare portions are simpler. For those, you should pay in roughly 15% of your income each quarter.

One alternative to paying the taxes quarterly through estimated payments is available if you or your spouse have another job that withholds taxes. You can adjust the withholding at that job and have your employer pay extra for you from each paycheck.

For those who are accustomed to receiving large refunds (usually thanks to our children), you may not need to do anything, but that again depends on your income and it would be wise to do an estimate to find out.

If you would like help with an estimate, please feel free to contact me. I would be more than happy to do it for you and it only takes a couple of minutes. 

If you have other questions as well, I would be happy to answer them.
Here is a worksheet for the end of the year to help online English teachers organize your expenses.  You may not have all of them and you may have some that are not listed here.  But it is a place to help you think about possibilities and to record your income and expenses for the year.

Click on the image to the right for a fillable PDF version.

Or click the button below for an editable Excel Spreadsheet version.
Editable Excel Spreadsheet of Organizer
Taxes 101
FAQ Video
Janice Cook and Amber teamed up to make a video of many of the most frequently asked questions for online English teachers.  Watch it to find out if your orange shirt is deductible or what is required to claim the home office deduction and many more.