How Do I Pull My Own Taxes From My Paycheck?
Employers are required to take taxes out of their employees' paychecks. This includes federal income tax, Social Security tax and Medicare tax. As a self-employed individual, you do not have an employer to withhold taxes from your paychecks and must therefore do so yourself by making estimated tax payments. Abide by the Internal Revenue Service's requirements for withholding your own estimated tax payments.
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Instructions
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Figure out if you must make estimated tax payments. In 2011, self-employed persons, or individuals filing as a sole proprietor, partner, or shareholder of a S corporation, must generally make estimated tax payments if they anticipate owing $1,000 or more in tax when they file their tax return. Those who are filing as a corporation and expect to owe $500 or more in taxes likely must pay estimated tax.
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Determine your estimated income tax payments by using Form 1040-ES. You may figure out your payments using an estimate of your taxable income for the year. To estimate your taxable income, subtract all the exemptions and deductions you will claim on your tax return plus eligible tax credits from your gross earnings. Use the 1040-ES tax rate schedule to determine your estimated tax payment based on your filing status and taxable income.
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Submit your estimated tax payments to the IRS in one payment by the tax-filing deadline --- typically April 15 each year --- or in four equal amounts on a quarterly basis. You may pay by check or money order via the estimated tax payment voucher, or electronically via the IRS website. If applicable, mail your estimated tax payment voucher with your payment to the address that matches your residence as shown on Form 1040-ES.
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Tips & Warnings
Unlike employees, you do not have an employer to pick up a portion of your Social Security and Medicare tax liabilities. You are responsible for the entire amount: in 2011, 10.4 percent for up to $106,800 of taxable income for the year for Social Security tax and 2.9 percent of all taxable income for Medicare tax in 2011. The IRS allows you to deduct half of your Social Security and Medicare taxes when figuring your adjusted gross income: total earnings minus adjustments to income.
If state income taxes apply, contact your state revenue agency for its procedures on making estimated tax payments.
If you receive other types of taxable income, such as dividends, interest, rent and alimony, you may have to make estimated payments.
Make your estimated tax payments on time to avoid penalties.
