Self Employed Taxes
Self Employment Tax in California covers state residents who don’t receive a paycheck like the W2 employees who get their taxes automatically deducted from their earnings. These self-employed individuals are their own employers, and they have to pay a bit extra in “self-employment tax” to contribute to Social Security and Medicare.
These SE taxes are used to pay:
- Federal Income tax
- State income tax
- Self-employment taxes
- Social security
- Medicaid/medicare
Apart from these above-mentioned taxes, freelancers and self-employed workers also have to pay for:
- Capital gains taxes: both short term and long term gains
- AMT or Alternative Minimum Taxes for those earning over $100k annually
According to the IRS, self-employed workers who earn less than $400 annually don't have to pay the Self Employment tax.
Moreover, the self-employment tax is considered a tax-deductible expense. Although the tax is charged on a taxpayer’s business profit, the IRS counts the 'employer' half of the self-employment tax, or 7.65% (calculated as half of 15.3%), as a business deduction for purposes of calculating that taxpayer's income tax.
Tax rates for s in California
The state of California requires you to pay taxes if you are a resident or nonresident that receives income from an California source. California has a flat income tax, which means that everyone, regardless of income, is taxed at the same rate.
The income tax rate in California is 4.95%, after an increase from 3.75% in 2017. California also has higher-than-average sales taxes and property taxes.
The following table represents the California Income Tax Brackets and Rates:
Single Filer/Married Filed Separately
BracketsRates
$0 - $9,3251%
$9,326 - $22,1072%
$22,108 - $34,8924%
$34,893 - $48,4356%
$48,436 - $61,2148%
$61,215 - $312,6869.3%
$312,687 - $375,22110.3%
$375,222 - $625,36911.3%
$625,370+12.3%
Married Filing Jointly
BracketsRates
$0 - $18,6501%
$18,651 - $44,2142%
$44,215 - $69,7844%
$69,785 - $96,8706%
$96,871 - $122,4288%
$122,429 - $625,3729.3%
$625,373 - $750,44210.3%
$750,443 - $1,250,73811.3%
$1,250,739+12.3%
Head of Household
BracketsRates
$0 - $18,6631%
$18,664 - $44,2172%
$44,218 - $56,9994%
$57,000 - $70,5426%
$70,543 - $83,3248%
$83,325 - $425,2519.3%
$425,252 - $510,30310.3%
$510,304 - $850,50311.3%
$850,504+12.3%
Single Filer/Married Filed Separately
A single filer represents the person who is unmarried and does not qualify for any other filing status. Generally, the tax rates and brackets that apply to single filers also apply to individuals who are married but file their taxes separately.
Married Filing Jointly
Married filing jointly represents the tax filing status available to married couples who were married by Dec. 31 of the tax year. Couples who file their taxes as Married Filing Jointly, get the most tax breaks.
Head of Household
Head of Household is a filing status for single or unmarried taxpayers who keep up a home for a Qualifying Person (child, relative, boyfriend/girlfriend, or any dependent). The Head of Household filing status has some major tax advantages over the Single filing status such as a lower tax rate and a higher standard deduction.
Deductions & Credits
The state of California also offers tax deductions and credits to reduce tax liability, including a personal exemption, itemized deduction, the earned income tax credit, child and dependent care credit, and college access tax credit.
The following table represents the California state tax standard deduction rate based on one’s filing status:
Filing StatusStandard Deduction
Single$2,200
Married filing separately$2,200
Head of household$4,400
Married filing jointly$4,400
If you are dependent within the state of California, you can claim a personal exemption of up to $1,000.
FlyFin’s California Freelance Tax Calculator can help you figure out your tax liability with ease.
Personal exemption
According to the IRS, a personal exemption refers to an amount that a resident taxpayer is entitled to claim as a tax deduction against personal income in calculating taxable income and consequently federal income tax.
Filing StatusPersonal Exemption
Single$124
Couple$248
Dependent$383
Tax Deduction in California | FlyFin
The following represents some of the top tax deductions for s in California
