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I have a W2 job that pays me $130K per year. I also have

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I have a W2 job...
I have a W2 job that pays me $130K per year.

I also have a home business that will make about $40K this year.     Do I need to pay SE tax on the $40K?   How do I file schedule SE?
Submitted: 8 years ago.Category: Tax
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Answered in 7 minutes by:
9/1/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello ralph,

For the 2009 tax year, you only pay social security tax on the first $106,800 of your taxable earnings. So since your regular W-2 job already exceeds that amount, you will not owe any SS tax on your self employment income.

However, there is no cap on Medicare taxes. Medicare is taxed at 2.9% of your total taxable earnings for the year, regardless of the amount. On your W-2 job, your employer pays 1.45% of that tax and the other 1.45% is withheld from your check. On your earnings from self employment, you will be responsible for the full amount of 2.9% since you are basically both the employer and the employee.

When you fill out Schedule SE, you will fill out Section B which is the long schedule, and this will allow you to exclude any SS tax due on the self employment earnings, as you will indicate on that schedule that you already paid the maximum tax on your regular job.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you ralph.

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Customer reply replied 8 years ago
LOL. Well that was easy.   Should have read the form more carefully.   Thanks Merlo!
Tax Professional: Merlo, Accountant replied 8 years ago
Thank you ralph, and let me know if you have more questions.

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