I started a sole proprietor business in 2008 and am calculating values for 2008 federal and state taxes. I buy items, and have them shipped directly to the customers. Can my profit total (before deductions) be after shipping fees, or is that before and the shipping fees are deductible afterward? I really want to do these right, and it’s a big deal because I will have to pay the 15% self employment tax on all profits before deductions. For example…Sally Sue purchased an item from me for 0. It cost me 0 to buy the item and send it to her. But I also paid in shipping costs. SO do I claim as my profits and then have a tax deduction of , or do I claim as my profits? By claiming I’m paying .50 in self employment taxes, but by claiming I’m only paying .50. And when those numbers equal thousands of dollars, it’s a huge difference.
To Morpheus: I do not make profits on shipping, and that is not what the question was. What I am asking is if the government will want me to provide a base profit BEFORE shipping expenses that I paid and then just deduct shipping expenses as a tax deduction OR if they see shipping expenses as something that can be deducted before base profit is recorded. In my example of the customer paying 0 and I pay 0 plus for shipping, that is saying that the customer paid 0 plus shipping, totally 0. I am an eBay seller, and do not condone cushioning shipping charges to make more profit, again that was not what the question was.

I currently live in the US and am considering a move to Montreal. I operate a home business, and all of my income is coming from US sources, but I have been told that Canada taxes all worldwide income. Then it seems that the US would give me some sort of tax credit for what I paid to Canada.

I expect to make ,000 before deductions. Does Canada have a similar system as far as self-employment taxes? Do they have a self-employment tax?

What abouts would I have to pay for tax, including federal and provincial?

I’m looking for tax software that is easy to use but good at handling somewhat complicated situations – I am partly self-employed as a 1099 contractor with a number of different organizations, and I also moved from one state to another partway through the year (so will have to file two separate part-year returns for the state taxes). I have been making quarterly estimated payments and I do not plan to claim business deductions – my expenses are so minimal that I’d rather just take the standard deduction. Still, I’d like the kind of software where it just asks me questions and then figures out which forms, schedules, etc. to fill out on its own – I used a free program (Tax Slayer, I think) last year and although I entered 1099 income I do not know if an SE was filed or not. (I’m sure I’ll get a bill later if not.) I liked Tax Slayer just fine when all I had were W2s to enter, but I’d really prefer to use a program where I know whether or not the self-employment taxes are being deducted.

I have done a lot of research on self employment taxes, and have the following information from ehow.com: Instructions
STEP 1: Figure out your net income from self-employment. Net income is typically your total business receipts minus your total business deductions. STEP 2: Multiply your net income from self-employment by 0.9235 (or 92.35 percent). STEP 3: Multiply the amount of your net earnings that is ,200 or less by 0.153 Add your two answers together. This is your self-employment tax. STEP 4: Report your self-employment tax on Schedule SE of the 1040. Tips & Warnings
You can deduct half of your self-employment tax in determining your adjusted gross income. Do this in the Adjustments section of the 1040.

My question is WHERE do I deduct the 1/2 of the self employment tax?

I will be working 40 hours a week at 8$ an hour. How can I figure out how much tax to take out of each pay check?

I work as an independent contractor and use the mileage deductions method. At 50 cents a mile, i will be able to deduct more than my income, it will appear as if i had a net loss. Do i still have to pay any self employment taxes or any other taxes?