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self employment income

Don’t Invent Income!

It may be tempting to invent income for a child, such as paying them to do the dishes, in order to qualify for a Roth IRA contribution. Don’t do it!

Social Security for the Self-Employed

As a self-employed small business owner, you have lots of plates to keep spinning, and lots of additional costs that you never dreamed of when you were employed by someone else (if you ever were), like health insurance, for example.  Another cost that you have to deal with when self-employed is Self-Employment tax. Self-Employment tax (SE tax) is essentially where you are paying both the employER and the employEE portion of the Social Security withholding tax.  This means that, for 2018, you are taxed at a rate of 12.4% on your first $128,700 of income (double the rate you’d have withheld if you were employed by someone else).  This doesn’t count the 2.9% that you also have to withhold for Medicare tax – which is another matter altogether. With this in mind, you might wonder if there are ways that you could reduce the Self-Employed tax…?  One way might be […]