I am employed by a company and make $120,000 a year. Social security is taken out of about the first $100,000. I also have a home-based business which will make about $30,000 this year. Do I need to pay self employment tax on the $30,000? How do I fil

ANSWER

Expert Thomas Gorczynski's Answer:

Self-employment tax consists of two components: Social Security (usually 12.4%; it is 10.4% in 2010) and Medicare (2.9%).

For 2010, only the first $106,800 of wages and net self-employment income are subject to the Social Security portion. This wage base is adjusted annually.

However, all of your wages and net self-employment income are subject to the Medicare portion.

You will need to calculate your self-employment tax on Schedule SE, Section B, which is the long-form.

Thomas Gorczynski, EA

Maryland

5 yrs experience

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