Anyone who is self employed with earnings more than $400 has tax obligations. That means paying Colorado self employment tax of 15.3%. Of that amount, 12.4% is dedicated to Social Security, old-age, survivors, and disability insurance, and 2.9% is dedicated to Medicare or hospital insurance.
You pay Colorado self employment tax based on your earnings. The 12.4% of Social Security is applied to a set amount, which in 2020 will be the first $137,000 of your earnings. The 2.9% of Medicare is applied to all your combined net earnings. There are some different filing requirements if you have a business with your spouse, or your spouse works for you. You can also receive some benefits at income tax time by deducting the employer-equivalent portion of your Colorado self employment tax in figuring your adjusted gross income.
Colorado self employment tax must be paid on a quarterly basis, or you could face a penalty. The dates for making quarterly estimated tax payments are:
Use Form 1040-ES, Estimated Tax for Individuals, to pay your Colorado self employment tax . When it comes time to file your annual tax return, use Schedule SE (Form 1040 or 1040-SR ), Self-Employment Tax to report your Social Security and Medicare taxes.