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Do I need to pay the selfemployment tax even though the Max

Do I need to pay...
Do I need to pay the selfemployment tax even though the Max SS was already withheld (4624) with the other taxes?
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Answered in 7 minutes by:
6/2/2012
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,682
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!
Self employment taxes have two parts - Social Security (OASDI) taxes and Medicare's Hospital Insurance (HI) taxes.
For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100 or $4624 - so you will not pay that part.
There is no limitation on taxable earnings for Medicare's Hospital Insurance (HI) taxes - thus - you will pay 2.9% of your net self-employment income.

You may reduce self-employment taxes for this and following years if you set S-corporation for your business activities.
In this case - you will be paid reasonable wages - subject of FICA taxes (equivalent of self-employment taxes) - and the remaining income will be passed to you of K-1 and will not be subject of self-employment taxes.

Let me know if you need any help.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,682
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