Taxes Made Simple

Lindsey (student, Cutco sales rep) asks:

I’m currently a student, and I worked last summer for a company that pays me as an independent contractor (Vector Marketing). I filled out a schedule C, but I was totally unaware of the self-employment tax thing. Was I supposed to pay that, or is there some exception for students?

Answer:

Lindsey, 

Unfortunately, there is no exception for students. Quite in fact, students are subject to all the same tax rules that non-students are. (There are, however, some deductions and credits available for education expenses.)  As such, your income as an independent contractor is subject to self-employment tax.

The good news is that you will at least get to subtract out all your business expenses from your business income, and then calculate the SE tax based upon the final, net amount. (As compared to having to calculate SE tax based on every dollar that the company pays you.)

And best of luck with your entrepreneurial endeavors. It's a great company you work for.

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