Self Employment Tax

Jamin_Mayer

Jamin_Mayer

Location
Longmont, CO
My self employment tax doubled this year. It is heafty too.

Anyone else hate making "progress" in this country? It seems like in many forms, if you are successful (and declare what you make), you get TAXED. 2 steps forward and 1 step back.

I am pursuing some one elses happines (not my own). Because the money I make, may as well be handed down to the next guy with no ambition at all.

Sorry for the rant, but this bothers me.
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I understand being frustrated with taxes. Quebec is one of the most taxed places in North America, but it has its advantages.

I had a slight pneumonia this winter. Went to the doctors, spent about a half hour with him and got a bunch of medication. Bill: 0$

My girlfriend hurt her back last year at work. She got 90% of her pay for like 6 months!!! Plus all her medicals bills were paid.

For the past two winters, my boss hasnt had enough work for the whole company so I go on unemployment for a couple of months while I go to school (which is basically free as well).

I know it doesnt work the same in the states, but Im glad we have a social net here in Canada that we can fall back in when things hit the fan. I met a Danish family while I was on vacation and they said their income tax was like 70% or something crazy like that!
 
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Go LLC

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Still gotta pay the tax.

No prob with the Rant Jamin. We all are feeling that way these days. And if we aren't, we will be soon.

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As an LLC you are an employee of the company, you still pay taxes, but not self employment tax.
 
Topphopper. It all depends on how you are treating the LLC. You can elect to have it treated as a sole-prop,partnership, or corp for taxing purposes. But no matter how you treat it, there will be Social Security/Medicare taxes paid, they just call it the Self Employment tax for Sole-props and Partners.

As a sole prop you pay the SE Tax on your schedule C profits. As a partnership it is based on your Schedule K profits. As a Corp, it is based on wages.

If you choose to be taxed as a corp is entirely possible for the owner to take a paycheck that is larger than profits. Since the SS/MC tax is based on wages you will end up paying more in this case as opposed to someone who pays the SE tax on similar profits.

SE tax and BOTH parts of the SS tax and amounts are the same thing. They just label it differently and instead of making an employer employee portion for the SE tax they just call it the SE tax. Both taxes are the same 15%+- rate.
 
SE is, in fact, the self employed person's contribution to SS and MC. The SE rate and the total Employers share/Wittheld share on payroll used to be identical. The former paying the full 15% and the latter splitting it between the employer and employee

We haven't had a payroll yet this witner so I don't know what the payroll rates are but I did hear that there might be some payroll tax relief there but not for the SE tax.

So, perhaps is a way, this year the two won't be the "same"
 
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...but I did hear that there might be some payroll tax relief there but not for the SE tax.

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Check this out. The IRS website reads that there will be a 2% decrease for 2010 and 2011 (for SE tax). It's better than nothing. But, will they just stick it to us in 2012 and 2013 to make up for their loss?
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I just notice that when my budget gets tight, I work harder. Sometimes for less money (low bids!) than we deserve.

When the City/State has budget problems: charge more tax, L&I audits and fine, cops giving (overweight!) tickets, Dept Revenue makes me monthly-not quarterly.
School for my kids starts at 9:30 (cutbacks!), my bank is closed on saturday, etc.
Frustrating.
p.s. - kids are healthy and my wife still likes me. (life is good!)
 
Jamin;
Read it carefully. Rate is still 15.3% for self-employment income earned in 2010. the reduced rate applies to the money we'll earn in 2011.
 
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It's better than nothing. But, will they just stick it to us in 2012 and 2013 to make up for their loss?

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You know they will. Unless, of course, some fiscally intelligent people are sitting in the house when it expires.

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When the City/State has budget problems: charge more tax, L&I audits and fine, cops giving (overweight!) tickets, Dept Revenue makes me monthly-not quarterly.
School for my kids starts at 9:30 (cutbacks!)...

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Almost seems they know that is a perfect time to put their boots on our necks...wait, I think that is exactly what the current administration said..."Put our boots on their necks..." Was he talking about us or someone else?
 
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Jamin;
Read it carefully. Rate is still 15.3% for self-employment income earned in 2010. the reduced rate applies to the money we'll earn in 2011.

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You're right. I read that quickly.
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I used to get so mad about paying tax... My dad set me straight one day. He said "If you aren't paying any taxes, you aren't making any money". He is right...

I have improved my financial life by eliminating the "surprises". We have a great accountant who lets us know what is coming (tax wise) all the time. Planning in advance has made it less stressful. My previous accountant would let us know a few days out that we owed a bunch of money... made me crazy.

I think we are all in for a wild ride in this area for a while... We elected a governor in Ohio who is making extensive cuts and trying to remove the budget deficit... His approval rating is awful and he is protested everywhere he goes... There is no easy solution to our nations economic situation.
 
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"If you aren't paying any taxes, you aren't making any money".

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That may apply to us, but apparently not to those who can afford the well-heeled lobbyists and accountants.

"All animals are equal, but some animals are more equal than others."
 
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