Legal & Tax
US tax calculators for freelancers, investors, and small business owners. For estimation only — consult a CPA for filing.
Gross revenue minus business expenses (Schedule C net profit).
| Year | Depreciation | Book Value |
|---|
IRS requires S-Corp owners to pay themselves a "reasonable" market salary.
Zero for most sole proprietors with no employees.
Self-Employment Tax Explained
Self-employed individuals pay both the employee and employer portions of Social Security (12.4%) and Medicare (2.9%), totaling 15.3% SE tax on 92.35% of net self-employment income (the 92.35% accounts for the employer-equivalent deduction). The IRS allows you to deduct half of SE tax from gross income, reducing your federal income tax base.
Key terms: Schedule C — where you report business income/expenses; Schedule SE — the self-employment tax form; Quarterly Estimated Taxes — required if you expect to owe $1,000+ in taxes; FICA — Federal Insurance Contributions Act (Social Security + Medicare).
Capital Gains Tax Rates
Capital gains tax applies to profits from selling assets (stocks, real estate, crypto, collectibles). Short-term gains (held <1 year) are taxed as ordinary income — up to 37%. Long-term gains (held >1 year) qualify for preferential rates: 0%, 15%, or 20% depending on taxable income. Most middle-income earners pay 15% on long-term gains. The Net Investment Income Tax (NIIT) adds 3.8% for high earners.
Depreciation Methods
Straight-Line Depreciation: Equal annual deductions over the useful life — (Cost − Salvage) ÷ Years. Simple and predictable. Double Declining Balance (DDB): Accelerated depreciation — 2 × (1/Life) applied to declining book value each year. Front-loads deductions for faster tax benefit. Section 179 and Bonus Depreciation (not in this calculator) may allow 100% first-year deduction on qualifying assets.
LLC vs. S-Corp Tax Strategy
A single-member LLC pays SE tax on 100% of net profit. An S-Corp owner-employee splits income into a "reasonable salary" (subject to payroll taxes) and a distribution (NOT subject to SE tax). The savings come from avoiding 15.3% SE tax on the distribution portion. These savings must offset the additional cost of S-Corp admin: payroll service (~$600–$1,200/yr), extra tax filing (Form 1120-S), and potential state fees. The tipping point is typically $40,000–$60,000 in annual net profit.
Section 199A — QBI Deduction
Established by the Tax Cuts and Jobs Act (2017), the Qualified Business Income (QBI) deduction allows eligible self-employed individuals and pass-through business owners to deduct up to 20% of their qualified business income from federal taxable income. This deduction is currently set to expire after 2025 unless Congress extends it. Income limits and W-2 wage tests apply above the phase-out thresholds ($182,050 single / $364,200 MFJ for 2024).
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