If you have workers you issues 1099s to, you don't have to figure any taxes out for them. For employees you issue a W2 to, the best thing is to use software or a payroll service to calculate the taxes. Unfortunately, I cannot offer specific assistance to any viewer.
When you pay self-employment tax, you are entitled to take 1/2 of the amount of the tax as an adjustment to income, lowering your taxable income. That works out to 7.65% of net business income. The amount of business net income is then reduced by that percentage in computing self-employment by multiplying it by .9235 (1 - .0765). Otherwise you would end up paying tax on that adjustment. I know it kind of goes around in circles, but it's not the only thing in the tax code that does.
2023 UPDATE:
The maximum amount of net self-employment income subject to the Social Security retirement rate is $160,200 for 2023.
would you please help me to figure estimated taxes for 1099 and/or W-2 workers? Thank you.
If you have workers you issues 1099s to, you don't have to figure any taxes out for them. For employees you issue a W2 to, the best thing is to use software or a payroll service to calculate the taxes. Unfortunately, I cannot offer specific assistance to any viewer.
not binding. need to be more explicit. where is .9235 coming from?
When you pay self-employment tax, you are entitled to take 1/2 of the amount of the tax as an adjustment to income, lowering your taxable income. That works out to 7.65% of net business income. The amount of business net income is then reduced by that percentage in computing self-employment by multiplying it by .9235 (1 - .0765). Otherwise you would end up paying tax on that adjustment. I know it kind of goes around in circles, but it's not the only thing in the tax code that does.