Kind of confused. Have several credits that have reduced my federal tax to zero from my regular job. But SE tax didn’t move. It’s $223 in SE taxes. Why wouldn’t the credits such at tax savers, eitc, ctc reduce SE down to zero as well? There was plenty leftover that it could have gone towards that, but it didn’t.
Are there any credits or special circumstances that reduce self employment taxes to zero?
byu/Coffeelover4242 intax
Posted by Coffeelover4242
10 Comments
Self employment taxes can’t be reduced, they can only be offset by refundable credits like EITC.
SE Taxes is the fancy words for Social Security and Medicare. Sorry but old people want their money.
You can use refundable credits to cover your self employment taxes.
You can’t use non refundable credits. Just like a w2 worker can’t use non refundable credits to offset fica tax
The Savers Credit, Earned Income Tax Credit, and Child Tax Credit are all credits against your income tax. The only way to reduce your Social Security and Medicare taxes is to make less money. This is true for wage income, as well as self-employment income.
Have you reviewed all of your business expenses to be sure that you’ve written off all your eligible expenses on Schedule C?
Because part of the self employment tax is your social security and Medicare payments.
SE taxes are just Soc Sec and Medicare, pretty much retirement savings. You should be happy to pay it.
There are no credits to reduce the amount of Social Security and Medicare taxes you pay on your wages as an employee, so why should there be a credit for self-employed people to do the same?
You posted this exact question three times. Please delete the extras.
Working outside of the US or owning a foreign entity
With 1099 self employment, you can file a schedule C. This allows you to deduct expenses relating to your self employment. If you drive an UBER, you can deduct mileage, a percentage of your phone usage. If you edit videos out of your home, internet expenses, phone use, computer equipment and software. If you work as a contractor, tools, mileage to the jobs, probably part of your phone usage.
So let’s say you make $20,000. You have business related expenses of $5000, your self employment tax is on $15,000 not $20,000