self-employment tax


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Self-employment tax

A tax self-employed people must pay to qualify them to receive Social Security benefits at retirement.

self-employment tax

A federal tax similar to the Social Security and Medicare taxes deducted and matched by employers. It is equal to 15.3 percent of net earnings from self-employment and must be calculated on Schedule SE and reported on Form 1040. Real estate agents, brokers, mortgage  brokers, and all other self-employed individuals are required to pay self-employment taxes. (See Tax Topic 554, “Self-Employment Tax” and Publication 334, “Tax Guide for Small Business,” at the IRS Web site, www.irs.gov.)

References in periodicals archive ?
In addition to self-employment tax, taxpayers must pay income tax at the applicable marginal rates provided under the Code.
The Tax Court held that Fleischer should have treated the income attributed to FWP as his own income on Schedules C for the years in question and should have reported and paid self-employment tax on the income.
No self-employment tax is due unless net earnings from self-employment are at least $434 for the taxable year ($400/92.35 percent).
* Owners do not have to pay self-employment taxes on their profits.
However, only $200 is subject to the OASDI self-employment tax ($106,800-$106,600 = $200), but the entire $106,600 is subject to the HI tax.
All non-passive business profits derived by a sole proprietor (including a single member limited liability company that is not classified as either a C or an S corporation) count as NESE under the self-employment tax. (43) Thus, the tax will apply to the entire amount.
(28) Taxpayers must include the alternative minimum tax and estimated self-employment tax in their calculation of estimated tax.
In Rhode Island, public debate did not make this distinction, and opponents of the providers seized on the fact that one of the union's leaders grossed $90,000 a year for her daycare home, a sum that does not reflect paid assistants, substantial operating costs, long hours and an extra 15 percent self-employment tax. Instead of shamefully low wages based on the economy of racism and sexism, the public heard about union fat cats.
That means it would reduce an adjuster's annual income and self-employment tax. He said the deductions could be taken on Schedule C and recommended IRS publication 463 for more information.
"A sole proprietor is a disregarded business; there is no advantage because you still pay self-employment tax. As a Sub S, you could take a profit distribution instead of just salary as an owner.
RELATED ARTICLE: Co-op payments to patrons subject to self-employment tax.

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