Business & farm

No you don't pay the self employment tax on your W2 but the wages do count towards the max you can pay.

 

SE line 7 max is 137,700 total of Schedule C Net Profit and W2 Wages.  It includes your W2 wages so you do not pay self employment tax on income more than 137,700 total.

 

Like if your W2 wages were 120,000 and your self employment Net Profit is 30,000 you would only owe SS tax on 17,700 of the 30,000.

 

How much is your W2?  Unless it is over 137,700 and you already maxed out for Social Security, you owe SS tax on the $4,000 Net Profit.

 

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 (If it is 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.