Ask Stacy: I’m Self-Employed — How Will the New Tax Law Affect Me?

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Welcome to “Ask Stacy,” a brief video function answering cash questions submitted by readers and viewers. You may learn to ship in a query of your individual beneath.

Should you’re not sometimes a video watcher, give it a attempt. These movies are quick and painless, and also you’ll study one thing precious. However in the event you can’t take care of video, no drawback: Simply scroll down this web page for the complete transcript of the video, in addition to some reader sources.

As we speak’s query is about being self-employed; particularly, the way it impacts your revenue tax image and the way that image has modified due to the brand new tax legislation.

I used to be mainly self-employed for 10 years earlier than I began Cash Talks Information, and that was 27 years in the past. So, I do know the professionals and cons of working for your self. Should you’ve ever thought-about going it alone, the brand new tax legislation goes to develop into pal of yours. Right here’s why.

For extra info on this matter, take a look at “Ask Stacy: How Will the New Tax Regulation Have an effect on Me?” and “6 Vital Take-Aways From the Tax Reform Effort.” You can even go to the search on the high of this web page, put within the phrase “taxes” and discover loads of info on absolutely anything you wish to know.

Acquired a query of your individual to ask? Scroll down previous the transcript.

Don’t wish to watch? Right here’s what I mentioned within the video

Stacy Johnson: Good day everybody, and welcome to your cash Q&A query of the day. I’m your host, Stacy Johnson. This query is dropped at you by MoneyTalksNews.com, the most effective in private finance information since 1991.

Right here’s as we speak’s query. It’s from Paul. Paul says, “What’s the distinction between working at an organization and being a self-employed musician by way of taxes? Will it’s more durable or simpler to file taxes and because of the tax adjustments, how will I be effected by it?”

That is one thing I do know slightly bit about as a result of I’ve been mainly self-employed for 37 years. I’ve been working at residence for about 25 of these. So, I’ve virtually forgotten what it’s wish to be an worker or to file a traditional tax return.

Listed below are three issues it’s worthwhile to find out about this matter. First, if you’re self-employed, your taxes shall be slightly more durable. Why is that? Effectively, as a result of relying on what sort of firm you’ve gotten, you may need to file a separate tax return on your firm. For instance, I’ve a subchapter S firm and I’ve to file a tax return for me and for that firm.

Plus, you’re going to must preserve observe of all of your bills to offset your revenue. That’s one thing quite a lot of workers don’t must do. So, taxes could be a little bit extra sophisticated.

Quantity two: Your taxes may also be slightly costlier. You’re going to must pay your entire Social Safety, for instance. You’re additionally going to must pay your taxes quarterly — they’re not being mechanically taken out of your paychecks. You’re additionally not going to be getting a 401(okay) match or have your medical insurance paid by an employer. These items all make being self-employed costlier.

That’s the dangerous stuff. What about the good things?

There’s by no means been a greater time to be self-employed, due to the brand new tax legislation. Why? As a result of this 12 months for the primary time ever, many self-employed folks can exclude as much as 20 p.c of their revenue from taxes. So, 20 p.c of all the cash I make goes to be tax-free. That’s a heck of a deal.

Sound good? Learn slightly bit extra about being self-employed. We’ve acquired loads of stuff at MoneyTalksNews.com.

That’s your query of the day. Now, right here is your monetary thought for the day. This one comes from Christopher Rice. Right here it’s:

“Day by day is a checking account, and time is our foreign money. Nobody’s wealthy, nobody’s poor. We’ve all acquired 24 hours every.”

Hold it in thoughts, people, have a worthwhile day, and I’ll see you proper right here subsequent time.

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The questions I’m likeliest to reply are these that may curiosity different readers. In different phrases, don’t ask for super-specific recommendation that applies solely to you. And if I don’t get to your query, promise to not hate me. I do my finest, however I get much more questions than I’ve time to reply.

About me

I based Cash Talks Information in 1991. I’m a CPA, and have additionally earned licenses in shares, commodities, choices principal, mutual funds, life insurance coverage, securities supervisor and actual property.

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