Lets say I own a sole proprietorship. Do I have to take out social security for my own pay? Or just my employees? How does it work in limited partnerships?
2007-11-11 06:56:39 · 7 answers · asked by TSSA! 3 in Business & Finance ➔ Taxes ➔ United States
As the proprietor, your social security/medicare tax would be calculated on your 1040, Schedule SE based on the income you made on your Schedule C. You do not take the social security from any "check" you would pay yourself. You technically do not have a "pay". Any check to yourself is considered a draw, not "pay".
In a limited partnership, the limited partners are usually considered investors not employees, because they do not work for the limited partnership. As such, the distributions are not subject to employment taxes. The distributions are entered on their K-1's. The general partners in the limited partnership may or may not work for the partnership. If they do work for the partnership, the pay is subject to employment taxes and is handled just as any other employee. General partners, whether or not they work for the partnership, could get distributions based on investment, etc. These payments would NOT be subject ot employment taxes and, as the limited partners, the distributions are entered on their K-1.
2007-11-11 12:35:20 · answer #1 · answered by beached42 4 · 0⤊ 0⤋
Owners of sole proprietorships pay a "self-employment tax", which is essentially the total amount that would have been made in social security and medicare taxes if they were employees. The self-employment tax is generally 15.3% of 92.35% of profits. The figure 15.3% is twice the usual rate because it is the sum of the 7.65% that is withheld from an employees pay and the 7.65% that an employer pays from the employer's funds (and does not withhold from employees). On your income taxes, you can deduct 1/2 of the self-employment taxes. This is an adjustment, not an itemized deduction, so you can claim it even if you also take the standard deduction.
2007-11-11 07:43:37 · answer #2 · answered by StephenWeinstein 7 · 1⤊ 0⤋
The employer's "pay" comes from the business...just like the employees, and as such, social security is deducted from the employer just like the employees.
2007-11-11 07:06:17 · answer #3 · answered by kathy_is_a_nurse 7 · 0⤊ 3⤋
Everyone is supposed to pay into Social Security. That is the only way you can collect from it is if you paid into it. Also, you have to have worked so many weeks to be able to draw.
2007-11-11 07:02:56 · answer #4 · answered by jamsterette@sbcglobal.net 4 · 0⤊ 4⤋
Yes you pay for yourself also.
2007-11-11 07:21:42 · answer #5 · answered by Judy 7 · 0⤊ 2⤋
You take it out for everyone in your employ, so that would include you.
2007-11-11 07:00:04 · answer #6 · answered by Anonymous · 0⤊ 4⤋
Yup.
2007-11-11 06:59:35 · answer #7 · answered by Anonymous · 1⤊ 4⤋