As a self-employed individual, you are responsible for figuring and paying your own taxes. Knowing how much to pay involves first calculating your income based on your gross business revenue and your deductible business expenses, and then figuring how much tax you must pay on the amount that you have earned. You are required to mail quarterly estimated tax payments to the IRS based on your projected income for the year, and fill out Form 1040 by April 15 of the following year, reporting your income and figuring your income tax and self-employment taxes due.
Calculate your income for the year by totalling your gross business receipts for the year, as well as your total allowable business expenses. Subtract your expenses from your gross receipts in order to figure your net profit, or taxable self-employment income.
Multiply your self-employment income by .153. This is your self -mployment tax, which is made up of a tax of 12.4 percent for Social Security and 2.9 percent for Medicare.
Figure your adjusted gross income by subtracting all of your allowable deductions from your gross income. These include your individual tax deductions, as well as deductions for any dependents, and a deduction equalling 50 percent of the self-employment tax you owe.
Look up your adjusted gross income in the IRS tax tables in the instruction booklet for Form 1040. Find the tax amount corresponding to your income and your filing status to determine the amount of income tax you owe.
Figure your state self-employment taxes according to the tax code of your particular state. Codes vary from state to state, so contact your state's revenue department for specific rates and regulations.