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moabjan
New Member

New to self employment. were my FICA payments calculated in my returns? If not, what suggestions could you offer?

 
1 Reply
Carl
Level 15

New to self employment. were my FICA payments calculated in my returns? If not, what suggestions could you offer?

Assuming your business is a sole-proprietorship or single member LLC, understand that under no circumstances do you issue yourself a W-2, 1099-MISC or any other type of tax reporting document. Since the IRS considers your business to be a disregarded entity, doing so would be the equivalent of taking money out of your left pocket, and putting it in your right pocket. It just increases your paperwork, as well as likelihood of making a mistake, and serves absolutely no purpose what-so-ever.

You are paying three things to the IRS on your Self Employment income. The first is your regular income tax, which is figured the same as taxes are on W-2 income.

The next one is referred to as the "Self Employment Tax" or SE tax. The SE tax is basically the employers side of your contributions to your individual personal social security account, as well as the employer side contribution to the general medicare fund. The program actually takes care of all that for you "in the background". But you can review what the program has figured to be your SE tax after you have completed your return in it's entirety. To review the SE taxes assessed on your business income, under the Business tab scroll down the "Business Taxes" and elect to update/start that section. Then select "Self Employment Tax' and just work it through to see the numbers generated by the program.

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