Being self-employed in New Hampshire comes with its own set of tax responsibilities. Whether you're a freelancer, a small business owner, or a gig worker, understanding how to manage your taxes is crucial. This guide will help you navigate the ins and outs of self-employment tax in the Granite State, ensuring you stay compliant and make the most of your earnings.
Self-employment taxes are the taxes that individuals who work for themselves must pay. Unlike traditional employees, self-employed individuals are responsible for both the employer and employee portions of Social Security and Medicare taxes. This is often referred to as the self-employment tax.
Understanding these rates and how they apply to your income is key to managing your finances effectively. Keeping track of your earnings and expenses will help you calculate your tax liability accurately.
Your net earnings are the amount you earn from your business after deducting business expenses. To calculate this, subtract your total business expenses from your total business income. This figure is crucial as it forms the basis for your self-employment tax calculation.
Make sure to keep detailed records of all your income and expenses. This includes receipts, invoices, and any other documentation that supports your financial transactions. Good record-keeping will not only help you calculate your taxes accurately but also provide proof in case of an audit.
Once you have your net earnings, apply the 15.3% self-employment tax rate. For example, if your net earnings are $50,000, your self-employment tax would be $7,650. Remember, this tax is in addition to any income tax you may owe.
It's also important to note that you can deduct half of your self-employment tax when calculating your adjusted gross income on your federal tax return. This deduction can help lower your overall taxable income.
Calculating self-employment taxes can be complex, especially if you're new to it. Consider using tax software or hiring a tax professional to ensure accuracy. These tools and services can help you navigate the intricacies of tax law and ensure you're taking advantage of all available deductions.
As a self-employed individual, you're required to pay estimated taxes quarterly. This is because you don't have an employer withholding taxes from your paycheck throughout the year. Instead, you must estimate your tax liability and make payments to the IRS every quarter.
Failing to pay estimated taxes can result in penalties and interest charges. To avoid this, calculate your estimated taxes based on your expected income for the year and make timely payments. The due dates for quarterly estimated tax payments are typically April 15, June 15, September 15, and January 15 of the following year.
Using a tax calendar or setting reminders can help you stay on top of these deadlines. Additionally, consider adjusting your estimated payments if your income fluctuates significantly throughout the year.
New Hampshire is one of the few states with no state income tax on wages. However, it does tax interest and dividends at a rate of 5%. If your self-employment income includes interest or dividends, you'll need to account for this when filing your state taxes.
It's important to note that New Hampshire has a business profits tax and a business enterprise tax. If your business is registered as a corporation, partnership, or LLC, you may be subject to these taxes. The business profits tax is 7.7%, and the business enterprise tax is 0.6% as of 2023.
Understanding these state-specific taxes can help you plan your finances and avoid surprises when tax season arrives. Consulting with a tax professional familiar with New Hampshire's tax laws can provide valuable insights and guidance.
If you use part of your home exclusively for business, you may qualify for the home office deduction. This deduction allows you to deduct a portion of your mortgage or rent, utilities, and other home-related expenses based on the size of your office space.
To qualify, your home office must be used regularly and exclusively for business purposes. The IRS offers both a simplified method and a regular method for calculating this deduction, so choose the one that best suits your situation.
As a self-employed individual, you can deduct a wide range of business expenses. These include office supplies, travel expenses, advertising costs, and more. Keeping detailed records of these expenses is crucial for maximizing your deductions.
Consider using accounting software to track your expenses throughout the year. This will make it easier to categorize and calculate your deductions when it's time to file your taxes.
Business mileage is one of the most valuable and commonly used deductions for self-employed individuals and independent contractors. The IRS allows you to deduct the miles you drive for work-related purposes, including client meetings, job sites, and business errands.
For 2025, the mileage reimbursement rate is worth 70 cents in deductions, adding up quickly to significant tax savings. Whether you’re delivering for a gig platform, running a small business, or freelancing, keeping accurate mileage records is key to claiming this deduction. The IRS requires detailed logs of your trips, including dates, destinations, and purposes. Tracking your miles not only helps you reduce your taxable income but also ensures you stay compliant with IRS rules and avoid audit risks. With tools like Everlance, you can automate your mileage tracking and generate IRS-compliant reports, taking the guesswork out of this essential tax deduction.
Managing self-employment taxes requires careful planning and organization. Here are some tips to help you stay on top of your tax obligations:
By following these tips and staying informed about your tax obligations, you can successfully manage your self-employment taxes in New Hampshire. Remember, staying proactive and organized is key to minimizing stress and maximizing your earnings.
Join over 3.5 million independent workers tracking their miles & expenses, filing taxes, and protecting their returns with Everlance.
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Brad Thibeau is the Head of Growth & Partnerships at Everlance. Brad has worked at Everlance since 2021 with a focus on helping self employed people save time and money on their taxes.
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