Being self-employed in West Virginia comes with many freedoms, but it also brings the responsibility of handling your own taxes. Navigating the world of self-employment tax can be daunting, especially if you're new to it. This guide will help you understand what you need to know about self-employed taxes in West Virginia, ensuring you stay compliant and avoid any unnecessary penalties.
Self-employed taxes are the taxes you pay as a freelancer, independent contractor, or small business owner. Unlike traditional employees, self-employed individuals are responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This is often referred to as the self-employment tax.
In addition to federal taxes, self-employed individuals in West Virginia must also consider state taxes. This includes income tax and any other applicable local taxes. Understanding these obligations is crucial to managing your finances effectively.
It's important to note that self-employment taxes are separate from income taxes. While income taxes are based on your total earnings, self-employment taxes specifically cover Social Security and Medicare contributions.
The first step in calculating your self-employment taxes is determining your net earnings. This is your total income from self-employment minus any allowable business expenses. Keeping accurate records of your income and expenses is essential for this calculation.
Common business expenses include office supplies, travel expenses, and any other costs directly related to running your business. Deducting these expenses from your total income will give you your net earnings.
Once you have your net earnings, you can calculate your self-employment tax.. Only 92.35% of your net earnings are subject to this tax, so you'll need to multiply your net earnings by 0.9235 before applying the tax rate.
For example, if your net earnings are $50,000, you would multiply this by 0.9235 to get $46,175. You would then apply the 15.3% tax rate to this amount, resulting in a self-employment tax of approximately $7,061.78.
In addition to the federal self-employment tax, you'll also need to pay West Virginia state income tax. West Virginia has a progressive income tax system with rates ranging from 3% to 6.5% depending on your income level. It's important to calculate this separately from your federal taxes to ensure you're paying the correct amount.
To calculate your state income tax, you'll need to determine your taxable income, which may differ from your federal taxable income due to state-specific deductions and credits. Consulting with a tax professional can help you navigate these differences.
As a self-employed individual, you're required to make quarterly estimated tax payments to both the IRS and the West Virginia State Tax Department. These payments help cover your income and self-employment taxes throughout the year, preventing a large tax bill at the end of the year.
To calculate your estimated payments, you'll need to estimate your total income, deductions, and credits for the year. You can then use Form 1040-ES to calculate your federal estimated payments and the West Virginia Estimated Tax Worksheet for your state payments.
At the end of the year, you'll need to file your annual tax return. For federal taxes, this involves completing Form 1040 and attaching Schedule C to report your business income and expenses. You'll also need to complete Schedule SE to calculate your self-employment tax.
For your West Virginia state taxes, you'll file Form IT-140. Be sure to include any necessary schedules and forms to report your income and deductions accurately. Filing your taxes accurately and on time is crucial to avoiding penalties and interest charges.
Maintaining accurate records is essential for self-employed individuals. This includes keeping track of all income, expenses, and tax payments throughout the year. Good record-keeping not only makes tax filing easier but also helps you in the event of an audit.
Consider using accounting software to organize your financial records. This can help you track your income and expenses, generate financial reports, and simplify the tax filing process.
If you use part of your home exclusively for business purposes, you may qualify for the home office deduction. This allows you to deduct a portion of your rent or mortgage, utilities, and other home-related expenses based on the size of your home office.
To qualify for this deduction, your home office must be your principal place of business or a space where you regularly meet with clients. Be sure to keep detailed records of your home office expenses to support your deduction.
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 business 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.
Self-employed individuals can deduct a wide range of business expenses, including office supplies, travel expenses, and advertising costs. These deductions can significantly reduce your taxable income, lowering your overall tax liability.
It's important to keep receipts and documentation for all business expenses. This not only supports your deductions but also helps you track your spending and manage your business finances effectively.
If you pay for your own health insurance, you may be able to deduct the premiums as a self-employed health insurance deduction. This deduction is available whether you itemize your deductions or take the standard deduction.
To qualify, you must not be eligible for employer-sponsored health insurance through another job or your spouse's employer. This deduction can provide significant tax savings for self-employed individuals.
Organization is key to managing your self-employment taxes effectively. Keep detailed records of all income and expenses, and set aside time each month to review your finances. This will help you stay on top of your tax obligations and avoid any surprises at tax time.
Consider using accounting software or hiring a bookkeeper to help you manage your finances. This can save you time and ensure your records are accurate and up-to-date.
Setting aside money for taxes throughout the year can help you avoid financial stress when it's time to make estimated payments or file your annual return. Consider setting up a separate bank account for your tax savings and transferring a portion of your income into this account regularly.
By planning ahead and staying organized, you can manage your self-employment taxes effectively and focus on what you do best—running your business.
Download Everlance to track your business miles and organize expenses automatically
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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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