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jsklhmedders
Level 1

My husband is a new business owner, sole proprietor, and the only employee. The business paid him once at the end of the year. How do I show tax, SS, ... taken out?

Thank you for your input.  I understand now and do not require further explanation.  Thanks Again!

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Accepted Solutions
MinhT1
Expert Alumni

My husband is a new business owner, sole proprietor, and the only employee. The business paid him once at the end of the year. How do I show tax, SS, ... taken out?

If your husband is a sole proprietor, he does not pay himself. And there is no withholding for tax, social security or medicare tax like for an employee.

 

When he files his tax return , the net income of his business (after deduction of all expenses) is what he earned for the year. This net income is subject to self-employment tax (which the equivalent of Social security and medicare tax for the self-employed). Also as there are no withholding for federal and state taxes, your husband must pay estimated taxes to the IRS and the stare Department of Revenue.

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2 Replies
MinhT1
Expert Alumni

My husband is a new business owner, sole proprietor, and the only employee. The business paid him once at the end of the year. How do I show tax, SS, ... taken out?

If your husband is a sole proprietor, he does not pay himself. And there is no withholding for tax, social security or medicare tax like for an employee.

 

When he files his tax return , the net income of his business (after deduction of all expenses) is what he earned for the year. This net income is subject to self-employment tax (which the equivalent of Social security and medicare tax for the self-employed). Also as there are no withholding for federal and state taxes, your husband must pay estimated taxes to the IRS and the stare Department of Revenue.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Carl
Level 15

My husband is a new business owner, sole proprietor, and the only employee. The business paid him once at the end of the year. How do I show tax, SS, ... taken out?

The owner of a sole proprietorship can not be an employee of that business they own, under any circumstances with no exceptions. The business is considered a disregarded entity by the IRS. All business income/expenses gets reported on SCH C as a physical part of the personal 1040 tax return. It doesn't matter if you're filing a joint return either.

Under no circumstances and with no exceptions will the owner of a sole proprietorship issue themselves a W-2, 1099-MISC or any other type of tax reporting document.

THe owner of the business may be required to pay quarterly taxes to the IRS (and the state if the state taxes personal income) but this has nothing to do with reporting the business on  your tax return. TurboTax is only for filing yearly returns, and can not be used for anything else.

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