FICA

[David586]

My Wife is self-employed in the sales of Realstate.  I know that using Turbo Tax, the self-employment tax is figured out for me and taken out.  Does Turbo Tax also take out for FICA automatically?

Thank you, David

[JBedford]

Hi, @David586 , thanks for the question! 

It's true that TurboTax will calculate the self-employment tax owed on self-employment income when you file your annual tax return. I'm a little confused by your phrase "taken out", though. Since FICA is reported on a W-2 form, it will also be reflected in your tax return once you enter the W-2 into TurboTax. 

Does that answer your question? Please let me know if not. Thanks! 

[David586]

No, not exactly.  Her self-employment income is on a 1099 (or 1098?) form, and nothing shows as being taken out for taxes.  That's why I wonder if when filing her self-employment, if the FICA Tax as well as the self-employment Tax are taken out by TurboTax?

Thank again,  David

[maureendudley · Accepted solution]

I think you may be confusing terminology. For me, with TurboTax, my self-employment income goes into the total tax liability on which we pay taxes. TurboTax then also calculates my self-employment tax (Social Security) on a separate line. Does that make sense?

[JBedford · Accepted solution]

Hello again, @David586 ! Self-employment tax is basically the self-employed persons "version" of FICA. Hope that clears up the confusion!

[David586 · Accepted solution]

I see now.

Thank you!

David

[VolvoGirl · Accepted solution]

The self employment tax is the FICA (both the employer and employee parts).  The SE tax is added to your income tax.  Turbo Tax automatically adds the SE tax to your total tax. 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 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.

[David586 · Accepted solution]

Yes, makes sense!

Thank you, I understand much better now.

David