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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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A taxpayer has W-2 income of $50k, and net self employment

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A taxpayer has W-2 income of $50k, and net self employment income of $110k due to the loss the W-2 job during 2009. The self employment is a sole proprietorship. FICA witholding was done on the $50k of $3,100 (6.2%). Does that contribution figure into the calculation of the SE tax? Put another way, does the taxpayer get any credit toward the remittance based on the new 106,800 limit where FICA stops? If not, is the $3,100 already contributed from the W-2 earnings considered an excess contribution to FICA? Please advise. Thanks.

Hello Roosevelt,


When a taxpayer has both W-2 wages and income from self employment, he will only pay FICA taxes on his total earnings up to the annual maximum which is $106,800 for the year 2009.


You will see how this works if you refer to Schedule SE. On line 7 of Schedule SE it shows the yearly limit of $106,800. One line 8d you then report your W-2 wages and subtract that amount from the limit. The balance is then the maximum amount of self employment earnings that you would continue to pay FICA on.


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Thank you Roosevelt



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