Small Business

You are required to pay self-employment tax on self-employment income after you retire and receive Social Security>

Rent from Real estate (except RE dealers), Dividends and Interest except dealers in securities) and Capital gains (except traders in securities) are not considered income subject to SE tax.

You are subject to self-employment tax on all earnings even though you can exclude from gross income your foreign earned income of up to $92,900 in 2011.

Yes. Beginning 1/1/11 you must use electronic funds transfer to make all federal tax deposits for employment taxes, corporation tax's and excise taxes. Forms 8109- and 8109-B Federal Tax Deposit Coupons cannot be used after 12/31/10. Generally electronic funds transfers are made using the EFTPS system. If you do not use EFTPS you can arrange for a trusted third party to make deposits on your behalf such as a payroll service or financial institution. To enroll in EFTPS visit www.eftps.gov or call 1-800-555-4477 1-800-555-4477. Speak to your local CPA about assisting you in signing up to the Federal Tax Payment System.

Guaranteed payments are made to individual partners for services rendered or for use of capital, and are not based on a partner's share of partnership income. The guaranteed payments are deducted from partnership income before determining the partnership's profit or loss.

The Self-employment (SE) Tax of 15.3% consists of 12.4% for Social Security and 2.9% for Medicare.
After multiplying your Sole Proprietorship’s Net Earnings by .9235, the combined 15.3% rate applies to the maximum taxable earnings base of $113,700 or less and the 2.9% rate applies to all taxable earnings exceeding $113,700.

When services are performed in the parents’ home according to instructions by the parents, you are considered an employee of the parents and do not have self-employment earnings.

If you are a ordained minister, priest, rabbi or member of a religious order who has not taken a vow of poverty of a Christian Science practitioner then you are subject to SE Tax unless you elect not to be covered on the grounds of conscientious or religious objection to Social Security benefits. A application for exemption Filed on Form 4361 must be filed with the IRS.

The IRS takes the position that income earned by a Consultant is subject to SE Tax.