Comments on: Any way to reduce my Self-employment tax that I pay without decreasing my Income?

By: Jss

Jss — Sat, 24 May 2008 17:10:01 +0000

On schedule C you can deduct business related expenses.
You are self employed or independent contractor. You will report your income and expenses on schedule C or C-EZ (Form 1040). This income is subject to SE tax at 15.3%. Read about self employed (or independent contractor) tax filing and payment of estimated taxes:

By: ninasgramma

ninasgramma — Fri, 23 May 2008 23:58:08 +0000

You must have expenses against your self-employment income. Expenses would include any of those listed on Schedule C.

Contributing to your own 401k, or other retirement plan will reduce your income taxes, it will not reduce your self-employment tax. However, if you have an employee, your payments toward the employee’s retirement plan is a deduction against your self-employment income. However, you will pay the employee’s half of SS and Medicare.

Contributions to your health insurance, or to your employee’s health insurance, are treated similarly to retirement contributions.

Depending on the nature of your business, you could look into forming an S Corporation. If it is appropriate to treat some of your payments as dividends from the S Corporation, you may escape some self-employment taxes, and pay self-employment taxes only on the payments you receive for services rendered.

By: xtraheavy01

xtraheavy01 — Tue, 20 May 2008 22:54:48 +0000

That makes no sense. If you prepared your Schedule C from the 1099 you received and you took deductions and you had more deductions then income., then you should wind up with a negative or loss on your Schedule C. There would be no self employment tax owed.

Unless what you are saying is that you have itemized deductions and you ended up with a net income from your Schedule C. then that would make sense.

Then the only way to reduce your SE tax is to reduce your net schedule C , in effect, claim more deductions to offset the Schedule C income.

If you have W-2 wages, make sure you take credit for the fica and medicare.

By: wartz

wartz — Mon, 19 May 2008 15:30:53 +0000

There is no options here. If you were a wage earner the same amount of tax would be due but it would be paid by withholding and the employer’s share.

By: travelguruette

travelguruette — Sat, 17 May 2008 21:47:28 +0000

If you dont have any income you dont have income tax. You still have to pay ss and medicare

By: Jason

Jason — Wed, 14 May 2008 22:09:25 +0000

Realistically speaking you will have wanted to pay the 15.3% of SE Tax, which is both Social Security and Medicare Taxes for you for the year. Your other option would be to put your income into a Tax Deferred retirement plan, like a Solo 401(k), a SEP, or a Traditional IRA. A financial adviser can help with this.

If you don’t want to reduce your income, the best option would be to make quarterly estimates to the IRS to reduce your liability at the end of the year. Failing to do that would also incur penalties to your balance due.

By: tkahrs12122

tkahrs12122 — Mon, 12 May 2008 07:48:48 +0000

That 15.3 is for social security and must be paid. There is no option.

By: Bibs

Bibs — Sat, 10 May 2008 16:12:00 +0000

When you retire some day, you will be glad that you have all those accumulated benefits. Do not fudge on this one. It is like shooting yourself in the foot.