Can I deduct full payroll taxes in schedule C?

[psharma6562]

In schedule C for line number 23, can I deduct full Payroll tax or I have to enter just the employer portion of the taxes?

[Rachel_W · Accepted solution]

You should only include the "employer" portion of the taxes.

To find the correct numbers from your Payroll Returns to determine payroll taxes paid, please use these figures: 

• Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return: Line 12 (Total FUTA tax after adjustments)
• Form 941: Add boxes 5a and 5c, then divide by 2 to calculate employer's match for Social security and Medicare taxes. 
• Your State most likely has an Unemployment Tax as well which requires you to file a return, so be sure to include that figure.
• You do not claim any taxes withheld from your Employee's pay as a payroll expense.  This is because you have already claimed their "gross pay" as a deduction under Wages.

[radhikasbeautysp]

Thank you for the quick response. This is really helpful..

So just to be clear the Gross Wages can include Employee Portion of Taxes (Federal Tax) + Net Pay, right?

[Rachel_W]

Yes.  For example your employee worked 10 hours and is paid $10 per hour.  His gross wages would be $100.  You use $100 as "wages" paid.  So the amount BEFORE any subtractions for fed, state, social security, and medicare taxes.