Bonsai Tax is built just for self-employed workers.
It helps tens of thousands of people across the country save an average of $5,600 on their taxes.
This handy book will guide through best practices to follow when calculating your freelance taxes.
Anyone who is a sole proprietor, business owner or is self-employed has to pay Pennsylvania self employment tax, which is actually a Social Security and Medicare tax. The Pennsylvania self employment tax provides 12.4% to Social Security and 2.9% to Medicare, for a total of 15.3%.
The Pennsylvania self employment tax is forecasted using two calculations. The Social Security payment is 12.4% applied against a predetermined base amount, which in 2020 is the first $137,700 of your earnings. The Medicare payment is 2.9% applied against all your combined net earnings. Then if you happen to run a business with your spouse, or your spouse works for you, there may be requirements to pay the Pennsylvania self employment tax on their behalf. You can lower your tax bill by tracking your business expenses with a 1099 excel template sheet or a tax software.
The payments toward Pennsylvania self employment tax must be made on a quarterly basis:
If you don’t follow the payment schedule, you could be subject to the estimated tax rate penalty.
Form 1040-ES, Estimated Tax for Individuals, is used to make Pennsylvania self employment tax payments. There is also a worksheet for forecasting your quarterly estimated tax obligations.