Reimbursement vs fees and taxes

@ceasesmith wrote:

John says: "Here is one of my first post. My point from the beginning was we pay Social Security and Medicare taxes. There's no way around that. It doesn't matter if it's gross or net, you cannot cut or eliminate them."

Why would it not matter if it's on gross or net? If your gross is $20,000, and net is $14,000, it's several hundred dollars less in taxes you'd have to pay.

We all agree: yes, we pay both sides of Medicare/Social Security. But it's on NET, not GROSS.

except if your only reportable income is on a 1099- MISC

Create an Account or Log In

Membership is free. Simply choose your username, type in your email address, and choose a password. You immediately get full access to the forum.

More About Reimbursements

@johnb974 wrote:

As a self-employed individual, you must pay Social Security and Medicare taxes. However, since your 1099-MISC income is not subject to self-employment tax withholding, you are required to calculate and pay these taxes yourself. These taxes appear on a Schedule SE, which must be attached to your tax return. If your only reportable income is from a 1099-MISC, than you are taxed on the gross.

WRONG.

@johnb974 wrote:

@ceasesmith wrote:

John says: "Here is one of my first post. My point from the beginning was we pay Social Security and Medicare taxes. There's no way around that. It doesn't matter if it's gross or net, you cannot cut or eliminate them."

Why would it not matter if it's on gross or net? If your gross is $20,000, and net is $14,000, it's several hundred dollars less in taxes you'd have to pay.

We all agree: yes, we pay both sides of Medicare/Social Security. But it's on NET, not GROSS.

except if your only reportable income is on a 1099- MISC

WRONG.

@ceasesmith wrote:

@johnb974 wrote:

As a self-employed individual, you must pay Social Security and Medicare taxes. However, since your 1099-MISC income is not subject to self-employment tax withholding, you are required to calculate and pay these taxes yourself. These taxes appear on a Schedule SE, which must be attached to your tax return. If your only reportable income is from a 1099-MISC, than you are taxed on the gross.

WRONG.

I quoted from the Turbo Tax site.

@johnb974 wrote:

@ceasesmith wrote:

@johnb974 wrote:

As a self-employed individual, you must pay Social Security and Medicare taxes. However, since your 1099-MISC income is not subject to self-employment tax withholding, you are required to calculate and pay these taxes yourself. These taxes appear on a Schedule SE, which must be attached to your tax return. If your only reportable income is from a 1099-MISC, than you are taxed on the gross.

WRONG.

I quoted from the Turbo Tax site.

And I quoted directly from the IRS.

@johnb974 wrote:

except if your only reportable income is on a 1099- MISC

No, that's not true. Although the majority of the time, I have both W-2 and 1099 income, I've had several years in which my only income was 1099-based. I still paid Social Security & Medicare taxes on my NET self-employment income. Not my gross. Whoever has been advising you on taxes is wrong, or you're not interpreting the instructions correctly if you do your own taxes (which is probably not wise).

I learn something new every day, but not everyday!
I've learned to never trust spell-check or my phone's auto-fill feature.

Here's what Turbo Tax says regarding SE: "Aside from the income tax, you'll need to pay self-employment taxes that support ... to the gross receipts you earned minus your deductible business expenses."

Note: GROSS RECEIPTS LESS DEDUCTIBLE BUSINESS EXPENSES.

OK, no gross.....but you still pay Social Security and Medicare taxes no matter what. The standard deduction applies to Federal income taxes, not Social Security or Medicare taxes.

You are absolutely correct. On years I owe no Federal Income tax, I still report, calculate and pay my ss and medicare. On my NET income, not on my gross.

I believe the common error is conflating business income (1099) with employment income (W-2). You are correct that the standard deduction does not apply to 1099 income (unless, like me, your 1099 income exceeds the standard deduction), but you can still deduct BUSINESS expenses from your 1099 income to arrive at the net.

From the horse's mouth: [www.irs.gov]

Pay it on your net.

"Let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?” ~Walter Williams

@ceasesmith wrote:

You are absolutely correct. On years I owe no Federal Income tax, I still report, calculate and pay my ss and medicare. On my NET income, not on my gross.

I believe the common error is conflating business income (1099) with employment income (W-2). You are correct that the standard deduction does not apply to 1099 income (unless, like me, your 1099 income exceeds the standard deduction), but you can still deduct BUSINESS expenses from your 1099 income to arrive at the net.

Thank you, that is what I've been trying to say.

Sorry, only registered users may post in this forum.

Click here to login

Reimbursement vs fees and taxes

Create an Account or Log In

Official List of Mystery Shopping Companies

Mystery Shopper Magazine