Does Social Security get paid on Self Employment 'tax due'

[soccerdad720]

I'm about to contact social security about discrepancies in my earnings record and I need to be sure about Turbo Tax "Federal TAX due" calculations. ( i don't want to open a can of worm$)

I had a small business income AND W2 income in all the discrepancy years. In those years, looks like SS only credited me with W2 Earnings.  Most of those years my 'small business income' was way higher.  

I've always paid the full amount due that Turbo tax told me to pay and no IRS has come knocking, so we're good there. 

Did my turbo tax 'federal tax due' payment include what I should have paid to Social Security?  So, when I tell them my SS earnings I need to get credit for should should be X amount higher, I HAVE paid the taxes in, right?  (I hope this is clear.) 

[Bsch4477]

Withholding for social security gets maxed out at certain income levels depending on filing status and the particular year. So if your W-2 social security withheld was high enough some or all of your obligation to fund social security was met which limited your self employment liability for social security. Note that there no comparable limit for Medicare tax payments. 

[soccerdad720]

I'm sorry, that's not even close to what I asked. 

[VolvoGirl]

Do you have a Net Profit on your Schedule C?   You need a Net Profit to be included in Social Security earnings. It may lag a year or two to get recorded on your Social Security account.

You will pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it.   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.  

The SE tax will be automatically included in your tax due or reduce your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23.  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 15 which flows to 1040 line 10.

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 $9,932.40 for social security. The max income for social security for 2023 is $160,200 between W2 wages and the schedule C Net Profit.  If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.

For 2024 the max for Social Security is $10,453.20 on $168,600 of wages (168,600 x 6.2%).

[NCperson]

@soccerdad720 review Schedule SE from your tax return package.  The social security tax on your self-employment income is calculated there.  Then the result flows to Schedule 2 and then to line 23 of Form 1040.

Turbo Tax would have calculated all this as part of the Amount Due. 

[soccerdad720]

between @VolvoGirl  and @NCperson - I definitely have my answer; and thank you all three who helped me.   @Bsch4477 I see NOW what you were trying to say, but yesterday I didn't have the capacity to understand. I had this AGI/Taxable Income comparison thing in my head and that was just not the way to think about this.  It makes perfect sense that SS would tax me only my net profits.  Some years I did and some years I didn't have a net profit, so they would only have W2 income on those years. 

And the short answer my question is really - "Of course Turbo Tax has you covered and does it right.  THAT'S why I used them for all these years.  No problem Brah!"   

Thanks again all and God bless you and your families!