We are MFJ. If we have caped the Security Security wage on the w-2, how to avoid being taxed for security security on Schedule SE?

[amer_okeh]

We are seeing that Social Security tax rate of 12.4 is applied on the self-employed income even after we caped the Social Security wage on my husband w-2 income. I understand I should only pay medicare tax at 2.9 rate.

[VolvoGirl]

Whose Schedule C and SE is it for?  Social Security is separate for each person.

If you have both W2 and self employment income........

You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C.  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.  

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

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 $10,453.20 for social security. The max income for social security for 2024 is $168,600  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.

Medicare is 2.9% (both er & ee parts) of all wages & 92.35% Schedule C Net Profit - no max.

If you are married the max Social Security tax is per person not combined.  Be sure the W2 and Schedule C are both assigned to the same person.

[DawnC]

The social security max is per taxpayer.   Look at Schedule SE - the limit is applied on line 7.