Are you considering joining the Great Resignation and becoming self-employed to be in charge of yourself?
Okay, but before leaping, consider the tax implications. This self-employment thing may not be as rosy as it appears.
Here’s the big picture.
Don’t Believe the Hype
Despite what some may believe, becoming self-employed won’t allow you to
write off all your meals as a business expense,
deduct the cost of taking your friends to sporting events,
deduct all your transportation expenses, and
write off the entire cost of owning or renting a residence that contains your home office.
Sorry about that.
While there are some tax advantages to being self-employed, they are underwhelming and should not be the main reason for deciding to go out on your own. We cover tax benefits later in this analysis.
The big non-tax disadvantage is you’ll have to pay for things that were formerly provided by your employer, such as
retirement plan contributions,
a company car (if you were lucky),
company-paid business trips that included elements of pleasure,
meals when you worked late at the office, and
And there is one big tax disadvantage: the dreaded self-employment tax.
Now, some details on the tax issues most likely to affect you as a self-employed taxpayer.
The Dreaded Self-Employment Tax Can Be Really Expensive
The self-employment tax is how our beloved U.S. Treasury collects Social Security and Medicare taxes on non-wage income from business-related activities. ... Log in to view full article.