Self Employment tax 15.3% include income tax?

[sondera88]

I have a full time "standard" job that withholds taxes and I get a W2 at the end of the year. I recently started a part time contracting job. I've been trying to figure out how to pay taxes on the part time job. I'm have no experience with this.

I have asked a question before and with some research I understand I have to make quarterly payments of Self Employment tax of 15.3% that covers both the employer part and employee part of Social Security and Medicare.

My question now is does the 15.3% not include income tax?

If not how much is income tax % wise? and if I have to make a quarterly payment on that as well do I pay it at the same time or does it need a separate payment? Can both be paid on the IRS/payments page?

Please any information is helpful.

[CalCountry · Accepted solution]

No, the 15.3% is only the SE self-employment tax and does not include payment for estimated income tax.  See the following citation in the section titled "What are My Self-Employed Tax Obligations?' on the IRS web page at:
   https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

"Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording "self-employment tax" is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax)."

[Critter]

And you make only one estimated payment for the combined total ... and yes you can use the IRS online payment system to do that.

[sondera88]

Can you tell me if how these payment are entered when filing my taxes at the end of the year. Are they again entered as a combined total?

[VolvoGirl]

Next year you will enter each estimated payment separately.  So keep track of the date and amount you paid each one.  You will get a 1040ES payment slip to mail in each quarter with your  check OR you can make payments directly on the IRS website.  

To pay the IRS electronically See <a rel="nofollow" target="_blank" href="http://www.irs.gov/uac/Electronic-Payment-Options-Home-Page">http://www.irs.gov/uac/Electronic-Payme...

And don't forget about your state estimated payments.

[sondera88]

Are the income taxes and estimated payments a combined total when the estimated payments are entered when filing my taxes? How do I enter the estimated payments on turbo tax?
(I'm sorry to keep asking questions. you are all being a big help.  again I'm use to just entering a W2 and being done)

[VolvoGirl]

Read the rest of my posts here, scroll down.

[sondera88]

Ok that does help, but my question is how to I make sure I get credit for the estimated payments I have made when I file my taxes next year? (in this case my 2016 taxes) I will enter my W2 my full time job and the 1099-MIC form the part time contracting job. But I will also need to enter my estimated payments or it will show I owe correct? How do I do that on Turbo Tax? and will the estimated payments and the income tax still be 1 amount when entered for filing?

[Texas Roger]

You will enter the amount of estimated taxes paid by quarter when you prepare your tax return. You must keep track of them and remember to enter them when you file. You will enter the total amount paid without distinguishing whether the taxes were paid for self employment tax or income tax. If you type estimated tax payments in the search box then Find then jump to on your 2016 tax return, that will bring up the screen where you enter them.

[VolvoGirl]

Yes you will need to enter each estimated payment date and amount.  There will be a section to enter them.  If you can't find where they go when you fill out your return next year then post a new question then.  You can see where they will show up by looking at your 1040 return for this year.  You will get credit for them on 1040 line 65.

[VolvoGirl]

Yes when you make the quarterly estimated payments for the SE tax (15.3%) you should include an amount for income tax.  (you just pay 1 amount for all)   Here's how to calculate the quarterly estimated payments. You start by using your 2015 return.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR
To prepare the quarterly estimated tax forms 1040ES for next year go to
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

Or here are the 1040ES instructions and blank forms
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates for 2016 are due April 18, June 15, Sept 15 and Jan 17, 2017.  Your state will also have their own estimate forms. You mail in the estimates with a check or you can do it electronically at the IRS and maybe your state.
 
 
Or if you have the Desktop Software, Go to Forms Mode. Click Forms in the top right (left for Mac). Then click the Open Forms box in the top of the column on the left. Open the US listing of forms and towards the bottom find them near the bottom of the US list. Click the plus sign by Estimated Taxes and Form W-4 Worksheet, then the plus sign by Estimated Tax Options.  You can override the amounts.

If you didn't owe or missed making the prior quarterly estimated payments and need to just calculate starting now, you can go though the Estimated Taxes section and just put $1 (one dollar) in for the quarters you missed.  Then it will only figure the current and remaining quarters.

[VolvoGirl]

Here is some general info for you,

If you have Self Employment income you have to file a schedule C in your personal 1040 return. You may get a 1099Misc for some of your income but you need  report all your income.  So you need to keep your own good records.

Here is some reading material……

IRS information on Self Employment….
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for SE tax on 92.35% of your Net Profit 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.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Home & Business return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>


PAYING QUARTERLY ESTIMATES
You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
 
- 2. You expect your withholding and credits to be less than the smaller of:
    90% of the tax to be shown on your current year’s tax return, or
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)