Question by james g: What tax options do self-employed contractors have?
My wife is a self employed contractor at a Salon. She gets taxed 15.3 percent for social security. Their are 5 others just like her at her Salon. Is there anything they can do to lower their tax responsibilities legally?
She is employed in Georgia.
Each ladies total annual income is less than $ 100k a year.
Is there something they can do, such as group together under a single business, that might help them or the tax exemptions basically the same?
Best answer:
Answer by garyg7
Does she have to provide any of her supplies? Does she wear protective gear? (In her case it would be a gown or apron.) Her place of business is the salon, so the commute there and back home is not deductible, but if she has to drive out of her way to pick up any supplies, then the additional mileage is deductible.
She would prepare either Schedule C or Schedule C-EZ. The relevant expenses are subtracted from her income before any tax is calculated.
The self-employment tax is nominally 15.3%, but because one half of the tax is an adjustment to your income, the actual rate is closer to 14%.
I hope this helps.
Gary
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