It depends. If you want to defer 50% of your self employment tax (determined based on the net profit for the period defined below) and if your income and expenses were steady throughout the year you should enter approximately 77.5% as eligible for the special deferral.
- Once this is entered, TurboTax will calculate the amount you are allowed to defer.
Excerpt from the 'Learn More' link in this section.
The amount of the self-employment tax that is eligible for deferral depends on your net income from 3/21/2020 to 12/31/2020.
If you made roughly the same amount each month, calculating your eligible income is easy. Just grab a calculator and multiply your net self-employment income by 0.775.
If your income was not consistent from moth to month, you'll need to do some extra math to find your eligible income. You can still use the amount we gave you for your net self employment income, but you'll need to subtract the net income your earned between 1/1/2020 and 3/20/2020. Remember, your net income is what you earned minus any expenses.
Self-employed individuals may defer the payment of 50 percent of the Social Security tax imposed under section 1401(a) of the Internal Revenue Code on net earnings from self-employment income for the period beginning on March 27, 2020 and ending December 31, 2020. (Section 2302 of the CARES Act calls this period the "payroll tax deferral period.")
Self-employed individuals determine their net income from self-employment and deductions based on their method of accounting. Most self-employed individuals use the cash method of accounting and will therefore include all income actually or constructively received during the period and all deductions actually paid during the period when determining their net income from self-employment.
The deferred deposits social security tax must be deposited by the following dates (referred to as the "applicable dates") to be treated as timely (and avoid a failure to deposit penalty):
- On December 31, 2021, 50 percent of the eligible deferred amount; and
- On December 31, 2022, the remaining amount.
See the IRS Deferred SE Tax FAQs for more information.
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