You would divide that amount by four and make your quarterly tax payments on the following schedule: For example, let’s say you expect to owe $2,000 in taxes. You pay your quarterly taxes on the 15th day following the end of the quarter. These additional payments are referred to as “quarterly” or “estimated” tax payments. If you think you might owe more than $1,000 in federal income taxes, you should be making payments throughout the year - not just when you file your return. Your self-employment tax, on the other hand, can only be reduced through business write-offs and tax credits. Your income tax can be reduced through adjustments (like for self-employed health insurance), standard or itemized deductions, and tax credits. So what’s the difference? In short, your income tax is assessed on your total income for the year, whereas self-employment tax is assessed on your business income for the year. Self-employed individuals have to pay both income tax and self-employment taxes. It seems like it should be an either or situation, right? Many freelancers are surprised to learn they have to pay multiple types of taxes on their return. That’s your gross income minus your business write-offs. A comprehensive list of available deductions can be found on the AZDOR website.Luckily, only your net earnings are subject to self employment taxes. On the tax return every amount that is deductible can be removed by using the associated deduction code. But what about the stuff that we don’t owe tax on? That is where deduction codes come into play. For a statewide list click here.ĭeduction Code – As a TPT (sales tax) state we report total gross receipts as revenue. Gilbert is GB 213, and the State/Maricopa County is MAR 013. Sometimes the codes for the City/Town and the State/County however, sometimes they are different as is the case with Commercial Property Rentals. For example, residential rental business code is 045. Region Code – Every City/Town and County is represented by a two or three letter code Gilbert is GB, and the State/Maricopa County is MAR.īusiness Code – Types of taxable business activity are represented on the return by a three digit number. So if you own more than one location in the same city, make sure that you are reporting the right numbers with the right location code. Location Code – Each physical location in the state is assigned a code by AZDOR. There are four types of codes that you will use when reporting your taxes. If you own a property/building that you are renting out, you will need to obtain the state transaction privilege tax (TPT) license from AZDOR. Tax rates vary depending on the type of business activity, the city and the county. The Arizona Department of Revenue (AZDOR) administers the tax for the Cities/Towns and Counties. Types of business activities subject to TPT include, but are not limited to: retail sales, restaurants/bars, hotel/motel (transient lodging), commercial leasing, advertising, amusements, personal property rentals, real property rentals, construction contracting, owner/builders, manufactured building, severance (mining, timbering), transportation, printing, publishing, utilities, communications, air/railroad, private cars/pipelines and use tax. TPT is applied to entities engaged in certain business activities, including residential rental. Although TPT is usually passed on to the consumer, it is actually a tax on the vendor. The Arizona transaction privilege tax (TPT) is commonly referred to as a sales tax however, the tax is on the privilege of doing business in Arizona and is not a true sales tax.
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