Estimated Tax

• As a self-employed taxpayer, you are required to keep up with your tax obligations by making estimated quarterly payments to the IRS. Even if you have taxes withheld by an employer, you still have to submit payments to the government based on your self-employment income. However, if you were a United States citizen during the previous tax year, and you did not owe any taxes, you may be exempt from making estimated payments.
  
  

Self-Employment Tax

• If you earn $400 or more during the tax year, you will have to pay self-employment tax. Using Form 1040, Schedule SE, you can figure your tax. Self-employment taxes are the equivalent of Social Security and Medicare taxes withheld by employers. The current rate is 15.3 percent of your income up to $102,000. Of that total, 12.4 percent is for Social Security and 2.9 percent is for Medicare. You can deduct one-half of your SE tax when figuring your adjusted gross income on Form 1040.
  
  

Employment Tax

• If you employ workers in your business, you will have to make additional tax payments to the government by withholding taxes from your employees. You must withhold federal income tax and Social Security and Medicare tax. In addition, you need to pay federal unemployment tax (FUTA) to fund the insurance program that provides benefits to laid-off employees. Use Form 8901-B to make required deposits to the government. Use IRS Form 941 (Employer's Quarterly Federal Tax Return) to file your tax return. If you have less than $1,000 in tax liability, you may use Form 944 (Employer's Annual Federal Tax Return).