Are otherwise in business for yourself (including a part-time business or a gig worker).įor instance, if you are working as a freelance or independent interior designer, you fall under the category of self-employed for taxation purposes.Are a member of a partnership that carries on a trade or business.Carry on a trade or business as a sole proprietor or an independent contractor.The IRS considers you to be self-employed if you: There may be some confusion in the minds of many self-employed individuals or independent contractors if they are liable to pay self-employment taxes in Arkansas. Who is Considered Liable to Pay Self-Employed Tax in Arkansas? Arkansas only collects taxes in the form of Social Security and Medicare from self-employed individuals. What Does Self-Employment Tax in Arkansas Consist of?Īs a self-employed individual living in Arkansas, you have to pay taxes on the income you generate from your business in the state. It includes an additional tax for those earning over a certain threshold. While the Social Security tax is a flat rate on net self-employment income up to an annual income ceiling, the Medicare tax is a flat rate with no income ceiling. It also consists of Social Security and Medicare taxes. As a self-employed individual, you must pay taxes on your net profit from your business. Self-employed workers in Arkansas must file an annual tax return. Your self-employment income becomes tax eligible the moment you receive it.Īlso know about: Missouri Self-Employment Tax What is the Self-Employment Tax in Arkansas? Yes, Arkansas has a self-employment tax depending on your earnings from the business during the financial year. Does Arkansas Have a Self-Employment Tax? It becomes solely your responsibility to withhold and pay taxes on the income you earned from self-employment. On the contrary, if you are working as a self-employed individual, your clients will not be responsible for withholding taxes on your behalf. As your employer, they are responsible for withholding taxes and then paying them to the government. When you are employed by a company or an individual, be it a full-time or part-time job, your employer withholds taxes from your paycheck. However, when you start working by yourself, you might have to pay self-employment tax which is different from other taxes. There are many people who are making a leap into full-time self-employment. With the gig economy flourishing, more and more people are making the most of self-employment opportunities to earn extra money.
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