If you are self employed and filing your taxes, how do you deduct one half of the self employment tax?

Question

I have done a lot of research on self employment taxes, and have the following information from ehow.com: Instructions
STEP 1: Figure out your net income from self-employment. Net income is typically your total business receipts minus your total business deductions. STEP 2: Multiply your net income from self-employment by 0.9235 (or 92.35 percent). STEP 3: Multiply the amount of your net earnings that is $76,200 or less by 0.153 Add your two answers together. This is your self-employment tax. STEP 4: Report your self-employment tax on Schedule SE of the 1040. Tips & Warnings
You can deduct half of your self-employment tax in determining your adjusted gross income. Do this in the Adjustments section of the 1040.

My question is WHERE do I deduct the 1/2 of the self employment tax?

I will be working 40 hours a week at 8$ an hour. How can I figure out how much tax to take out of each pay check?

Answer 1

On the first page of the Form 1040 you enter 1/2 of the SE Tax computed from Schedule SE. For 2006 this is Line 27.

Here is the 2006 Form 1040:

http://www.irs.gov/pub/irs-pdf/f1040.pdf

I don't understand the second question about working 40 hrs/week for $8/hr. That doesn't sound like self-employment. If you are employed, fill out a W-4 at work. If you are self-employed, at this level of income, I would just settle up what you owe when you file your taxes and not send in estimated tax the first year you are in business.

The second year, if you anticipate owing tax in excess of $1,000 mail in quarterly estimated tax payments. You can print the vouchers at irs.gov.

Answer 2

No, you get a DEDUCTION, not a credit, for the $one hundred and eighty, which means that a lot of your earnings isn't taxed. if you're in a 15% bracket, a $one hundred and eighty deduction or adjustment will dodge $27 in tax.

Answer 3

you should get taxcut software from h & r block; lots of tips for small business owners; and you can deduct the cost of the software ($19) under "tax prep costs"

Answer 4

http://www.irs.gov