Quote:
Originally Posted by JP513
S Corp.
It's far superior to being self-employed because of social security taxes, which are 15.65%. If employed, employee and employer each pay half--but self employed obviously has to pay ALL.
Let's say you make $100k.
As a self-employed person, you pay $15.65k on soc sec taxes.
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Wrong.
First of all only the first $94,200 is subject to BOTH the S.S. part( 12.4%) and the medicare part( 2.9%) of SE taxes. Above that you only pay on the medicare part. So if you made say $194,200 the $100K over you only pay $2900.
So on $100K income first think you do is multiply $100K by 92.35%. That comes to $92,350. Mulitply that by 15.3% which is $14,130. Now 50% of that( $7065 ) is deductable off your taxable income. So if you are in the 28% tax bracket that's shaves $1978 off your taxes.
Don't believe me?
http://www.irs.gov/pub/irs-pdf/f1040sse.pdf