Yes you pay both SE tax and regular income tax on the Net Profit.
Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. 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 is already included in your tax due or reduced 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 14 which flows to 1040 line 10a. Turbo Tax automatically calculates the SE Tax and Adjustment.
The 50% SE tax deduction only reduces your taxable income and regular income tax. It will not reduce your schedule C Net Profit or reduce the total self employment tax.
For 2020 Schedule C Net Profit or Loss goes to 1040 Schedule 1 line 3. Then the total on schedule 1 line 9 goes to 1040 line 8.
If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out. Turbo Tax does it automatically for you.
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 $8,537.40 for social security. The max income for social security for 2020 is $137,700 between W2 wages and the schedule C Net Profit.
Medicare is 2.9% (both er & ee parts) of all wages & 92.35% Schedule C Net Profit - no max.
You are paying 15.3% for……
SS for employer 6.2% (up to 137,700 wages & profit)
SS for employee 6.2% (up to 137,700 wages & profit)
Medicare for employer 1.45% (on all wages & profit, no max)
Medicare for employee 1.45% (on all wages & profit, no max)
