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TroyWells
New Member

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

All that I can find seems to indicates the estimate includes your portion of FICA, SS, and Medicare AND what would normally be paid by your company. However, Turbotax seems to think it only pays part, and then I have to pay FICA again on top of it? I know self employment requires paying your share and company share, but I thought both were included in 1040ES. Are they both?
6 Replies
Critter
Level 15

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

Estimated tax payments are to cover all taxes on the federal return based on your estimated income ... it will cover the federal & SE taxes ( FICA is on a W-2). 


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 2014 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.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

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.)

To prepare estimates for next year, 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 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

 

TroyWells
New Member

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

Ok. Then here is the problem. My self-employment income was approx $3,000. My estimated tax from the 1040ES was approx $426. Based on the changes to my estimated refund in TurboTax, Turbotax thinks I owe $876 in taxes for this amount. The crazy thing is that when I checked the FICA tables with the 1040 form, the difference in tax owed based on my total income before the $3,000 is $450. Therefore, Turbotax ADDED this $450 to the $426 from my 1040 ES. I would have expected it to see the $450 and subtract the $426 I already paid, and maybe say I owed another $24. Is Turbotax figuring this wrong?
Critter
Level 15

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

You will need to contact TurboTax support for this situation as I don't think we are talking about the same thing which is confusing to both of us ….
Go to this website to contact TurboTax support during business hours - <a rel="nofollow" target="_blank" href="https://support.turbotax.intuit.com/contact/">https://support.turbotax.intuit.com/contact/</a>
TroyWells
New Member

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

The only options are the community and the $60 option. Is there another option?

Let me ask my question another way. Self-employment requires you to pay taxes normally paid by the employer as well as taxes I would normally pay. Are both normally reflected in the calculations in the 1040ES or does the 1040ES only reflect the part normally paid by the employer?
Critter
Level 15

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

Yes they are both  reflected  ...  the SE (self employment) taxes which includes both the employer & employee portions that the SE person needs to pay are both computed.  When you can save a PDF of the return and review the estimated payment worksheet ... that may help you see what you are looking for.

How does TurboTax calculate my estimated tax payments?
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/3301730">https://ttlc.intuit.com/replies/3301730</a>
TroyWells
New Member

Does a 1040ES just allow you to pay part of self-employment taxes or is it meant to pay all?

That is what I thought and why I think something is wrong. If I understand the appropriate portion of my $3012.50 earnings from Schedule C was added. The tax (above the tax on other income) for this amount was $450. The tax I paid calculated from from the 1040 ES was $426. In theory, TurboTax should have subtracted $426 from $450 and said I owed an additional $24 in taxes, right?

Instead, it appears TurboTax calculated that my 1040 ES should have been $426, so it ADDED $426 to $450 to get a total tax due (for this portion only) of $876. Then it subtracted $426 that I paid, so that it showed I owed an additional $450. Did TurboTax make a mistake?
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