If I am an employee earning $150k salary from a company, which I don't have any ownership. At the same time, I have my own small business which has net income of $50,000. QuestionsDo I still need to pay/pre-pay Social Security tax through the self-employment tax? Or I don't need to pay the Social Security tax piece because $150k is more than the Social Security wage base limit of $147,000?Will TurboTax consider this situation and calculate the correct tax refund?

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Social Security Tax when I have both W-2 income and small business

Forum|Forum|2 years ago
September 23, 2023
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If I am an employee earning $150k salary from a company, which I don't have any ownership. At the same time, I have my own small business which has net income of $50,000.

Questions

Do I still need to pay/pre-pay Social Security tax through the self-employment tax? Or I don't need to pay the Social Security tax piece because $150k is more than the Social Security wage base limit of $147,000?
Will TurboTax consider this situation and calculate the correct tax refund?

Best answer by VolvoGirl

Yes. You don't need to prepay the SS part of SE Tax since you are over the $147,000. But the Medicare part does not max out.

Turbo Tax figures it out for you. If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.

The SE tax includes what you already paid in from your W2 so your schedule SE tax will only be the difference up to the max amount of $9,114.00 for social security. The max for social security for 2022 is 6.2% of wages plus schedule C net profit up to $147,000. Medicare is 2.9% (both er & ee parts) of all wages & schedule C profit - no max.

VolvoGirlAnswer

Employee

Yes. You don't need to prepay the SS part of SE Tax since you are over the $147,000. But the Medicare part does not max out.

Turbo Tax figures it out for you. If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.

The SE tax includes what you already paid in from your W2 so your schedule SE tax will only be the difference up to the max amount of $9,114.00 for social security. The max for social security for 2022 is 6.2% of wages plus schedule C net profit up to $147,000. Medicare is 2.9% (both er & ee parts) of all wages & schedule C profit - no max.