
Originally Posted by
Melonie
I'm certainly not an expert ... but ...
self-employed persons do have to pay a 15.3% Social Security and medicare tax regardless of the amount of income earned. So if you earned $20k, about $3,000 will be due for this 'self-employment' tax.
the chart that the financial adviser showed you was probably referencing income tax ... which is a different tax altogether even though the IRS collects both taxes at the same time. If you earned $20k, the amount of income tax you owe after exemptions and deductions is probably very low.
Up to the point where the IRS audits you, it's possible to file an Amended tax return for previous years. Thus if you want to 'straighten out' your tax situation for last year you are still able to do so.
You are also correct that, if and when the IRS audits you, anecdotal stories about being given false information by a licensed accountant aren't going to mean much.
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