There are no specific tax brackets for 1099 income. Instead, the income you earn as an independent contractor or freelancer is taxed according to the same tax brackets as regular income. The tax brackets for 2021 are as follows:
It's important to note that as an independent contractor or freelancer, you are responsible for paying both the employer and employee portion of Social Security and Medicare taxes, which is known as self-employment tax. This tax is calculated as 15.3% of your net income, and is in addition to your regular income tax.
To calculate your taxes as an independent contractor or freelancer, you'll need to determine your net income by subtracting your business expenses from your total income. You'll then use this net income to calculate your income tax using the tax brackets mentioned above. In addition, you'll need to calculate and pay self-employment tax, which is 15.3% of your net income. You can use tax software or consult with a tax professional to help you with these calculations.
Yes, there are several deductions and credits available for independent contractors and freelancers. Some common deductions include home office expenses, business travel expenses, and equipment expenses. You may also be eligible for the Earned Income Tax Credit if you have a low to moderate income. It's important to keep detailed records of your business expenses and consult with a tax professional to ensure you are taking advantage of all the deductions and credits available to you.
If you don't pay your taxes as an independent contractor or freelancer, you may be subject to penalties and interest charges. The IRS may also take legal action to collect the taxes owed. It's important to file your taxes on time and pay any taxes owed to avoid these consequences.