Question about paying social security and FICA/Medicare when self employed?

Question

My mother will begin working but unlike most people she is simply going to get a check of about 500 per month from her employer. No taxes will be taken out, no fica, no social security.. just straight 500 gross pay.

I know she will have to file a tax return at the end of the year with IRS but that would only be for federal and state tax..

But my question is:

Will she be forced to pay medicare, fica, social security on her own or can she not pay that?

I assume this is kind of like being self employed in that you do have the option to pay social security, fica, etc but you do not have to by law?

Answer 1

She will have to file a tax return at the end of the year with the IRS, that would be for federal tax. She'll have to file a separate state return to take care of any state tax. Since she is self-employed she will need to fill out a schedule C as part of her federal tax return, and will report her $500 per month income from her employer, and also any expenses she had from earning that $500 per month. If her net Schedule C income is more than $400 she will have to pay self-employment (SE) tax as part of her tax return, in addition to the regular federal tax she'll pay. SE tax is 15.3% of 92.35% of net schedule C income as long as the net is more than $400. She doesn't have a choice whether to pay it or not pay it. There is no option.

Answer 2

You've heard wrong about ss and medicare payments being optional for self-employed people - payment IS required if the total net self-employment income is over $399 for the year. It's paid with the federal tax return. The net self-employment income is calculated on a schedule C or C-EZ, then a schedule SE to figure self-employment tax (social security and medicare), then the numbers from the bottom of the two schedules transfer to the 1040. Your mom will follow this process for her new job.

The return she files with the IRS is for federal taxes only, including the social security and medicare. If her state has a state income tax, then she'll file a return with the state also.

Answer 3

The arrangement you describe is self-employment. Her net income is subject to Social Security and Medicare taxes. She does not have the option to not pay.

Assuming this is her only earned income, she will pay approximately 15% of her net income for Social Security and Medicare taxes. This will be figured on Schedule C of Form 1040. She will pay this in addition to income taxes.

The federal income tax return is used for both income taxes as well as Social Security and Medicare taxes.

Answer 4

Your mother is working as an independent contractor. She must file her tax return form 1040. She will report her income on shadily C (Form 1040): Profit and Loss from Business (Sole Proprietorship). She can deduct her business expenses. She will also file Form 1040 (Schedule SE): Self Employment Tax

On your net income from self-employment (that is from schedule C) she must pay 15.3% employment taxes.

Your mother has no choice. She must file and pay taxes including social security and medicare taxes.

Answer 5

1) If she is an employee, it is illegal for her employer to fail to deduct, and pay to the government with the proper forms, FICA and other federal taxes, as well as state deductions, from her pay. This is proper only if she is an independent contractor and not an employee.

2) If she actually is an independent contractor and not an employee, she will need to file Schedule SE with her federal tax return, and pay the appropriate social security tax as per that form.