The update now includes the expanded information for better clarification. Thank you for the clarification dmertz.
As an additional side note, the reduction of the self employment net profit before applying the self employment tax is because Congress was trying to give self employed taxpayers a small break by reducing the self employment income by 7.65% (the total social security and medicare tax combined paid by employees) before calculating their self employment tax.
- 1 minus .0765 = .9235
- All net self employment income is now reduced by taking the total net profit x .9235 which produces the actual income used by the SSA.
Please update if you have more questions or need further assistance and we will help.
@Casey007
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