The IRS requires employers to report wage and salary information for employees on Form W-2. Your W-2 also reports the amount of federal, state and other taxes withheld from your paycheck. As an employee, the information on your W-2 is extremely important when preparing your tax return.

You are considered self-employed if you carry on a trade or business (not just a hobby), or you are in business for yourself whether it is full time or part-time. A self-employed person can be a sole proprietorship, an independent contractor or a freelancer. You are considered self-employed even if you are paid in cash and do not receive a 1099-MISC. Are you part of the new Gig or Shared Economy and not sure how to report Income from that activity or how to file, estimate Taxes?

As a self-employed individual, you are responsible for paying income taxes and self-employment taxes. Self-employment taxes are paid in addition to regular income taxes. Self-employment tax is made up of Social Security and Medicare taxes.

Independent contractor income is compensation you receive for doing work or providing services as a self-employed individual, not as an employee. If you are self-employed and an independent contractor, your compensation is reported on Form 1099-MISC (along with rents, royalties, and other types of income). If you received a 1099-MISC instead of a W-2 , eFileIT the payer of your income did not consider you an employee and did not withhold federal income tax or Social Security and Medicare tax. A 1099-MISC means that you are classified as an independent contractor, and independent contractors are self-employed.

If you own rental real estate, you should be aware of your federal tax responsibilities. All rental income must be reported on your tax return, and in general the associated expenses can be deducted from your rental income.

If you are a cash basis taxpayer, you report rental income on your return for the year you receive it, regardless of when it was earned. As a cash basis taxpayer you generally deduct your rental expenses in the year you pay them. If you use an accrual method, you generally report income when you earn it, rather than when you receive it and you deduct your expenses when you incur them, rather than when you pay them. Most individuals use the cash method of accounting.

If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Refer to IRS Publication 523, Selling Your Home provides rules and worksheets.

If you receive an informational income-reporting document such as Form 1099-S, Proceeds From Real Estate Transactions, you must report the sale of the home even if the gain from the sale is excludable.

If you are self-employed, and you expect to owe $1,000 or more in taxes when you file your return, then the IRS requires you to make quarterly estimated tax payments. Estimated tax payments are used to pay income tax and self-employment tax. If you do not pay enough tax throughout the year via estimated tax payments to cover your tax liability, then you will be charged a penalty by the IRS. The tax penalty is calculated on your tax return, and added to the amount you owe (or subtracted from your refund).

When you prepare and efile your return on eFile.com and include your self employment income, we will calculate your quarterly estimated taxes that you should pay in the next tax year, and we will also prepare vouchers you can use to mail in your payments to the IRS on the dates that they are due. You don’t need to do any calculations, we do all the work for you.

You can also make your estimated tax payments electronically online. You can pay online using a credit card, debit card, or electronic funds withdrawal. If you make your payments online, you do not have to mail vouchers to the IRS. To pay online, go to https://www.irs.gov/payments.

You may have to pay estimated income tax four times throughout the year (quarterly) because you do not have taxes withheld from your pay by an employer. The quarterly tax payment periods for the Tax Year are in the chart below: