topic SMLLC double-taxation self-employment tax in Get your taxes done using TurboTax

SMLLC double-taxation self-employment tax

siddjain1 — Tue, 24 Feb 2026 08:14:03 GMT

w.r.t. this article: https://www.nolo.com/legal-encyclopedia/self-employ[product key removed]s-single-member-llcs.html

author clearly states: Self-employment tax is separate from, and in addition to, the tax you pay on your gross income.

so then with a SMLLC and using pass-through taxation, if I run a business and the business makes a profit of $100,000 then:

1. I have to include that $100,000 as part of my normal income on 1040 (this is by definition of pass-through taxation) and pay taxes on it.

2. Not only that I have to pay self-employment tax on $100,000

Question 1: is this correct?

Question 2: is this not double-taxation?

Question 3: if I were operating as a sole proprietor, do I still pay the self-employment tax? If not, then I am at a tax advantage operating as a sole-proprietor vs SMLCC

Re: SMLLC double-taxation self-employment tax

Anonymous_ — Fri, 29 Dec 2023 19:33:38 GMT

@siddjain1 wrote:
.......if I were operating as a sole proprietor, do I still pay the self-employment tax?

You're correct on both counts except with a single-member LLC you are operating as a sole proprietor.

Single-member LLCs are disregarded for federal income tax purposes and report on Schedule C (1040) in the same manner as would sole proprietors.

Re: SMLLC double-taxation self-employment tax

VolvoGirl — Fri, 29 Dec 2023 19:35:05 GMT

Yes the self employment tax is in addition to any regular income tax on the Net Profit. It's for the FICA (SS & Medicare) tax that isn't taken out like on W2 wages. 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.

#3...yes a Single Member LLC is a disregarded entity and is filed on Schedule C same as a sole proprietor or self employment. You pay the SE tax on all of them.

Re: SMLLC double-taxation self-employment tax

Mike9241 — Fri, 29 Dec 2023 19:55:05 GMT

no it is not double taxation since the SE tax is separate and apart from income tax. if you had $100,000 in wages 7.65 % would be taken from that for Social Security and Medicare taxes which is somewhat the same as your SE Tax, There are differences. If you get a w-2 your employer would pay the other 7.65 % for Social Security and Medicare taxes on the wages. As self-employed you get to deduct 1/2 your self-employment taxes in arriving at taxable income. With a w-2 there is no similar deduction.