This handy book will guide through best practices to follow when calculating your freelance taxes.
Employers withhold Social Security and Medicare taxes and make payments on behalf of their employees. But individuals who work for themselves have to pay their own Illinois self employment tax. That amount is 15.3%, with 12.4% going to Social Security and 2.9% going to Medicare.
To determine the amount of Illinois self employment tax owed, you need to determine your annual earnings. Then you apply the Social Security 12.4% to a base amount, established in 2020 as the first $137,700 of your net earnings. The Medicare 2.9% is applied to all your combined net earnings. If you have a married couples business there are some variations in what you would file.
Since you don’t have an employer making your payments, you need to pay Illinois self employment tax on a quarterly basis. Payments are required on:
The Illinois self employment tax payments can be made with Form 1040-ES, Estimated Tax for Individuals. You will need some information to complete the form, including your previous year’s income tax return, or an estimate of your annual earnings.
