In your tax return the regular income tax and FICA (self employment tax) are added together giving you a total tax due. So the estimated tax you pay really goes to both. It's like withholding from your job. Yes You can increase your job withholding to cover your self employment.
Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.
The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15. The SE tax is in addition to your regular income tax on the net profit. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a. Turbo Tax automatically calculates the SE Tax and Adjustment.
The 50% SE tax deduction only reduces your taxable income and regular income tax. It will not reduce your schedule C Net Profit or reduce the total self employment tax.
For 2019 Schedule C Net Profit or Loss now goes to 1040 Schedule 1 line 3. Then the total on schedule 1 line 9 goes to 1040 line 7a.
If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out. Turbo Tax does it automatically for you.
The SE tax includes what you already paid in from your W2s so your schedule SE tax will only be the difference up to the max amount of $8,249.80 for social security. The max income for social security for 2019 is $132,900 between W2 wages and the schedule C Net Profit.
Medicare is 2.9% (both er & ee parts) of all wages & schedule C profit - no max.
You are paying 15.3% for……
SS for employer 6.2% (up to 132,900 wages & profit)
SS for employee 6.2% (up to 132,900 wages & profit)
Medicare for employer 1.45% (on all wages & profit, no max)
Medicare for employee 1.45% (on all wages & profit, no max)
