Math question on the self employment tax.

If I make $10,000 doing mystery shopping, my self employment tax would be $1413. Of that $704 is deductible on the 1040. Is that $704 taken off the $1413? My only income is from mystery shopping. I'm using an online calculator for this.

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No. Why do you say your only income is mystery shopping when you state in another thread that your social security is taxed?

If you're using TurboTaxFree (right off the IRS website), it'll walk you right through everything.

Did you take 100% of your business deductions you are entitled to on Schedule C?
@ceasesmith wrote:

No. Why do you say your only income is mystery shopping when you state in another thread that your social security is taxed?

If you're using TurboTaxFree (right off the IRS website), it'll walk you right through everything.

Did you take 100% of your business deductions you are entitled to on Schedule C?

Social Security is taxed when you're under Obamacare. I have Turbo Tax Business software. I'll figure out my taxes for next year, using estimates. I took part of the business deductions, but not all of them. That will change this year.
I have no idea what you're talking about. Social Security benefits are subject to federal income tax if and only if your annual income exceeds a certain level, and even then, they are only partially taxed. If you're using Turbo-Tax Business, that's the wrong software to use. That's for corporations, with a completely different set of tax forms.

If you're NOT incorporated, you just need the Free File TurboTax (which is FREE, and is good for income up to about $58,000 for a single person), which covers the 1040 AND self employed tax forms.
I just finished my taxes, yippee! I used Tax Act. One of my banks provides it for free for their customers. It was pretty easy, much easier than it was when I printed out the forms and wrote everything in (which I did for a long time). I got my taxes done in 3 hours and it used to take a lot longer, LOL.
When you sign up for Obamacare they include your Social Security when figuring what you pay for on the insurance. It is a tax on your Social security, since they count it as income
I'm speechless.

You're talking apples in an orange grove.

You jerk from income tax to Obamacare, which has NOTHING to do with income tax (well, MAYBE one line on the 1040). Payment for Obamacare is NOT a tax.
@ceasesmith wrote:

I'm speechless.

You're talking apples in an orange grove.

You jerk from income tax to Obamacare, which has NOTHING to do with income tax (well, MAYBE one line on the 1040). Payment for Obamacare is NOT a tax.

Have you ever applied for Obamacare? Does Social Security Income Count As Income For Health Insurance Subsidies? Non-taxable Social Security benefits are counted as income for the Affordable Care Act and affect tax credits. This includes disability payments (SSDI), but does not include Supplemental Security Income.

Edited 1 time(s). Last edit at 04/14/2019 11:10PM by johnb974.
Yeah, just exactly what I said above -- ONE LINE ON THE 1040.

Counting as income doesn't mean it's taxed. It's counted as income to determine your various eligibilities for Obamacare

Apples and oranges.

Quit trying to do your own taxes and consult a pro.
@ceasesmith wrote:

Yeah, just exactly what I said above -- ONE LINE ON THE 1040.

Counting as income doesn't mean it's taxed. It's counted as income to determine your various eligibilities for Obamacare

Apples and oranges.

Quit trying to do your own taxes and consult a pro.

You sound like politicians who add on a FEE and say it's not a tax, it's a fee. If it's counted as income, for any reason, it's taxed.
If adding Social Security as income, causes you to pay MORE for insurance, that's a tax on your Social Security.
Something just occurred to me.

I once left the house for a long route. A hundred miles from home, I drove into a white-out blizzard.

There was no other traffic.

After a while, I realized why.

Everyone else was smart enough to stay home.

Certainly explains why no one else bothered to answer your question.
@ceasesmith wrote:

Fine. I'm talking INCOME TAX. It's still apples and oranges.

Get a tax pro.

They are taxing Social Security. A tax is a tax.
So, I'm going to insert my opinion here.

A tax question was asked. It was answered intelligently.

If you wish to make a political statement, you have done so.

I wish you had not.

Happy Easter.

(my religious statement)
No, the $704 is not taken off the $1413. You still have to pay the full $1430 in self employment taxes. The $704 is taken off your gross income, so you will have a lower AGI when calculating regular income taxes..
@johnb974 wrote:

If I make $10,000 doing mystery shopping, my self employment tax would be $1413. Of that $704 is deductible on the 1040. Is that $704 taken off the $1413? My only income is from mystery shopping. I'm using an online calculator for this.

Sounds like you missed the party. The party is on the tax form Schedule C. One of the craziest things about the party is that you get to deduct 54.5 cents for every mile you drove while mystery shopping. That is the mystery shoppers best deduction by far. Unless you ride the bus!
@Sobrokeigot2dothis wrote:

@johnb974 wrote:

If I make $10,000 doing mystery shopping, my self employment tax would be $1413. Of that $704 is deductible on the 1040. Is that $704 taken off the $1413? My only income is from mystery shopping. I'm using an online calculator for this.

Sounds like you missed the party. The party is on the tax form Schedule C. One of the craziest things about the party is that you get to deduct 54.5 cents for every mile you drove while mystery shopping. That is the mystery shoppers best deduction by far. Unless you ride the bus!

I've always used the mileage deduction.
@mystery2me wrote:

No, the $704 is not taken off the $1413. You still have to pay the full $1430 in self employment taxes. The $704 is taken off your gross income, so you will have a lower AGI when calculating regular income taxes..

I noticed something about that. If your only income is from mystery shopping, that $704 deduction is useless. Since I might not pay any federal taxes. My total income might be around $14000.
The original question asked is about self-employment tax, and it seems like there may be some confusion about what that even is. It's not income tax, so no deductions would apply to it.

You pay the SE tax you owe, and for that, you receive a deduction on your 1040. If you don't make enough $$ to have that deduction be relevant, so be it.

From the IRS website:

"Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording "self-employment tax" is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax)."


P.S. Since political posts are not allowed on the forum, please refer to the program by it's proper name, the ACA or Affordable Care Act. Otherwise, you politicize the conversation.
@SteveSoCal wrote:

The original question asked is about self-employment tax, and it seems like there may be some confusion about what that even is. It's not income tax, so no deductions would apply to it.

You pay the SE tax you owe, and for that, you receive a deduction on your 1040. If you don't make enough $$ to have that deduction be relevant, so be it.

From the IRS website:

"Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording "self-employment tax" is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax)."

.

Its safe to assume that he is not asking about the actual SE Tax because as you say that is a cut and dry number of 15.3% of whatever you clam your income was. I think hes confused and to make a long story short that could cost him money in the long and short run. The only real answer is he needs to call the IRS and order all the FREE booklets and forms and go over them and fill them out himself. That is the only way he is going to understand.
I gave everything to the CPA and although my income is fairly high, he was able to only take the standard deduction. He had the 1099's, a mileage chart, my out of pocket expenses and still he took the standard deduction. I actually got a refund for the first time in years and it was used to pay my quarterly estimated taxes for this quarter.
So if I earn enough to pay federal taxes by doing mystery shopping, I could apply that part of the Social Security/ Medicare tax against it.
No. Wasn't that your initial question, and wasn't it answered already?

The deduction for half of SE taxes reduces your AGI. So for example, if your GI is $14,000, you subtract about $700 from that, and your Adjusted Gross Income becomes roughly $13,700.

You would still have to pay the full $1,400 SE taxes. Add to that any Federal Income Tax due.

Get a tax pro.
I'm really hesitant to give more info, but really, you DO understand that the $14,000 that would be taxed would be AFTER YOU DEDUCT BUSINESS RELATED EXPENSES, right? So if your record keeping is diligent, your "taxable" amount might only be $800-$900.

For example (hypothetical ONLY), I made (gross) $22,000 mystery shopping last year.

I put 38,000 miles on my car doing so. I have written records to support that. (A typical route for me is about 800 miles, but I have done routes of over 1200 miles.)

I have printing expenses, and various other business related expenses (including per diem allowance for nights away from home on business, again, superbly supported by receipts and written records) that further reduce the taxable MSing income.

I paid SE tax on $983 self-employment income.

You take these business-related expenses regardless of the rest of your tax return -- it has nothing to do with "itemized deductions" and so on.

And, once again, if you're using Turbo Tax Business, that is the WRONG software; it's not for self-employed independent contractors, it's for INCORPORATED businesses. So if you're not incorporated, it's the wrong tax program for you to use.

As one of the above posters mentioned, you can get all sorts of tax info directly from IRS.gov.

But I would recommend that you get a tax "guy".
Up until this year I made about $4000 a year on mystery shopping. Things have changed, now I'm making about $1500 a month. I have to look at my taxes again. Taxes were not an issue in the past, now it will be.
If you've been making $4,000 a year MSing, I should sincerely hope you're already familiar with all this.

Or perhaps you just haven't bothered reporting and paying taxes on it. That's the only reason I can think of that you would not already be familiar with all this stuff.
I did report everything, but never had to pay the quarterly taxes. Everything changes this year. I'll be looking for more deductions and ways to cut my cost.
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