As an independent contractor, you are responsible for filing your own taxes. This means that you need to know how much you have to make in order to file taxes. In the United States, the Internal Revenue Service (IRS) requires individuals to file taxes if they make over a certain amount of money each year. In this article, we will outline how much an independent contractor has to make to file taxes.
The first thing to keep in mind is that the amount you have to make to file taxes varies depending on your filing status, which can be single, married filing jointly, married filing separately, or head of household. For the purposes of this article, we will focus on the filing status of single.
If you are an independent contractor and you earn more than $400 in net earnings (income minus expenses) during the tax year, you are required to file taxes. This is because independent contractors are considered self-employed and are responsible for paying both the employer and employee portions of Social Security and Medicare taxes, known as self-employment taxes. If you earn less than $400 in net earnings, you do not have to file taxes.
In addition to self-employment taxes, you may also be required to pay federal income tax. The amount of federal income tax you owe depends on your income level and filing status. The IRS has a tax bracket system, which means that the more you earn, the higher your tax rate.
For tax year 2021, the tax brackets for single filers are as follows:
– 10% on income up to $9,950
– 12% on income between $9,951 and $40,525
– 22% on income between $40,526 and $86,375
– 24% on income between $86,376 and $164,925
– 32% on income between $164,926 and $209,425
– 35% on income between $209,426 and $523,600
– 37% on income over $523,600
It is important to note that these tax brackets are subject to change each year, so it is important to check with the IRS for the current year`s tax rates.
In addition to federal income tax, you may also be required to pay state and local income taxes. The amount of state and local income tax you owe depends on the state and locality you live in. Some states do not have a state income tax, while others have a flat rate or a graduated rate system similar to the federal system.
In summary, as an independent contractor, you are required to file taxes if you earn more than $400 in net earnings during the tax year. You may also be required to pay self-employment taxes, federal income tax, and state and local income taxes, depending on your income level and filing status. It is important to keep accurate records of your income and expenses throughout the year and to consult with a tax professional if you have any questions about your tax obligations.