Benni asked:
I understand that commissions, if not included in W-2 income, will be taxed normal income tax plus FICA self-employment taxes. Let’s say I make $45,000 in regular W-2 salary and an additional $30,000 in commissions (for which the employer doesn’t pay any FICA) - how much would I owe in taxes??
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2 users responded in this post
FICA refers to w-2 employment payments made to the Treasury by an employer paying both the employer and employee withholding.
Self employment is reported on a 1099 misc. The amount of tax due is based on the schedule C self employment earnings report where the earnings are matched to business deductions such as mileage and other expenses providing the net earnings.
The net earnings are attached to a schedule SE for self employment tax. Net earnings multiplied by .09235 multiplied X 15.3% on net earnings up to and including $87,900. Medicare tax of 2.9 % of net SE income applies with no limit on which the medicare is applied.
The above answer is mostly correct with exceptions to the limits.
For 2005 the social security tax base was $90,000 (not $87.900)
For 2005 the base is $94,200
These amounts are indexed for inflation and change each year.
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