Is it true that self-employed people pay more?

Question

income taxes?

Answer 1

Yes. If you are an employee, you are responsible for 1/2 of the social security tax (6.2%) and 1/2 of the medicare tax (1.45%). Your employer pays the other half of both. If you are self-employed, you are the employee and the employer, so you pay both halves of the tax. Of course, that's also provided that you report 100% of your income as a self-employed person on your tax return, which a lot of self-employed people don't.

Answer 2

Income taxes - no they don't pay more, they pay at the same rates, and might even be able to take some deductions that an employee with the same income could not take.

But social security and medicare - yes. The same total amount is paid in. But for an employee, the employer pays half of the total, the employee only pays half. For someone self employed, since you are both the employer and the employee, you pay both halves.

Answer 3

Yes, self employed people take the entire bite of the Self-Employment Tax (15.4%). However, they do receive a half deduction of SE tax on their income tax and do receive the option of getting more business deductions than a general employee has. However, some people reduce these taxes by incorporating and treating some of their wages as compensation (which is not subject to SE tax) because they are considered an employee under the tax code.

Answer 4

All of the respondents have hit the answer on the head. The message they are sending is one most employees do not understand about their employer. A few days ago there was a question about healthcare being nationalized and the person writing the question thinks his $100 contribution is all it costs. He did not understand that the employer has a much larger portion to pay. The same with SSID. The employee pays a portion but the employer also pays a portion.

This is a good question for people to review and try to inderstand how all businesses work.

Answer 5

Bottom Line: Yes they do. I've been in business since 1-6-92 www.ttgsupply.com. As a sole-proprietor you file a 1099. All your deductions are subtracted from that total. As in one of your answers it is true, the employer has to match Social Security and Federal, but that's standard as a deduction for taxes. As A self employed business owner you have to file and pay, 1099's, 941's, 1040's. It sucks and since Clinton self employed persons do receive alot more breaks because of being considered a "small business" owner but alot less "freedoms" to write off, office entertainment (over $500.00 is split on 1099 and your personal 1040) furnishings, home based businesses (IRS 1098 if you own the dwelling) and etc....Is it worth being your own boss? Hell yeah, no one tells you what your paycheck is, but Uncle Sam does want his share.

Answer 6

Both prior posts are correct. The percentage a self-employed person pays is more, however the amount that can be written off as expenses tends to be more as well.

In my line of business I see a lot of tax returns, and I can honestly say that it irks me to see people who claim to make $20,000 a year or less living in million dollar homes!

Answer 7

Oh, so sorry, you're actually not remembering properly, till you in addition to mght spend a great deal of money on gas, or perhaps deduct a good number of mileage; meaning you're making $10K, yet spent a tone of money to earn it. Assuming it extremely is no longer precisely genuine, you will owe Feds approximately $500 in earnings tax, and approximately $1530 in self-employment tax. i assume you will owe Ohio interior the $a hundred - $3 hundred variety. you will additionally be penalized only a splash for no longer having paid something in expected money.... despite the fact that, there are some issues you're able to do to shrink those taxes, in the journey that your dad and mom are alive, in the event that they very own their residing house, and you act earlier December a million. With their help, there are a pair of tax making plans "tricks" you need to use to shrink the Fed and State earnings taxes to 0, and shrink the self-employment taxes to approximately $750, and your dad and mom won't pay one greater nickel in taxes. in case you have residing grandparents who additionally very own their very own residence, you may shrink it no taxes, and no person pays any greater desirable tax. i'm assuming that the two your dad and mom and grandparents could supply you back any money that i could coach you tips on a thank you to grant them.... it extremely is rapid, person-friendly and criminal. yet I won't divulge it right here in this talk board. i'm a CPA that no longer only prepares taxes, yet can coach you criminal tips on a thank you to shrink your taxes. enable's decide a thank you to connect in case you have an interest.

Answer 8

Yes.
When you're self-employed, you have to pay the employer's half of social security & medicare (7.65%) in addition to the employee's half (7.65%) for a total of (15.3%)

Now, you do get to deduct the self-employment taxes from your income, so the effective tax that you pay is less than 15.3%, but it is still more than the 7.65% you would pay if you were a W-2 employee.

I hope that helps.

Answer 9

Absolutely not! Many creative SE people, unfortunately for the rest of us, pay far less.