Who Form 2350 Employed 2023-2024

In this presentation, we will discuss self-employment tax related to a small business, specifically a sole proprietor and Schedule C income. Self-employment tax can have a significant impact on many small businesses, so it's important to consider the pros and cons. One advantage of having our own business is the ability to easily write off expenses, unlike a W-2 income individual. However, one disadvantage is the self-employment tax. If we work for someone else, we still have to pay similar taxes, such as payroll taxes or FICA taxes, which include Social Security and Medicare. However, as employees, we only pay half, while the employer pays the other half. If we work for ourselves, we have to pay both the employee and employer portions of Social Security and Medicare. This means that if we made the same net income as a W-2 employee, our self-employment tax would be higher. Self-employment taxes, although reported on Form 1040 for Schedule C businesses, are different from normal income taxes. They are more similar to FICA or payroll taxes. For more accounting information and courses, you can visit our website at countinginstruction.info. Now let's talk about FICA taxes. Social Security tax is 12.4%. If we were a W-2 employee, we would only pay half of that. However, as a sole proprietor, we have to pay both the employee and employer portions. Medicare tax is 2.9%. Together, Social Security and Medicare make up 15.3% of our Schedule C income. This means that in addition to income taxes, we also have to pay FICA taxes as a sole proprietor. There is a Social Security limitation set at $128,400 of self-employment income. If our income exceeds this amount, we no longer have to pay Social Security tax. For example, if our income is $100,000, we would pay 12.4% on that...