I’m self-employed and do schedule C’s on my taxes. Mostly retired now, but a little schedule C income still. Very little. But when I look at my “Earnings Taxed for Social Security” on my Social Security statement, the figures do not match my schedule C profit. Why would that be? Even to the point of saying $0 when I did have a profit, albeit very small.
Thanks.
When you’re filling out Schedule SE to calculate your Self Employment taxes, what do those numbers say, and do they match what Social Security says?
Regards,
-Chuck
Home Fool
1 Like
Thanks Chuck! Duh, of course I should be looking at SE, not C!
That’s the issue. It does match, at least close enough. For whatever odd reason, rounding or whatever, it’s $1 off.
Thanks, RB
2 Likes
Because, as @TMFBigFrog points out, SS earnings and taxes are not a direct calculation from Schedule C profit, but rather, are done on Schedule SE 2023 Schedule SE (Form 1040) (irs.gov) One of the major things that Schedule SE does to determine SS earnings and taxes is to multiply your Schedule C profit by 92.35% It then applies a floor of $400 and an inflation-adjusted ceiling ($160,200 for 2023, lower for earlier years) to determine the earnings that are subject to SS taxes, and therefore, would show up on your SS statement as “Earnings Taxed for Social Security” If you are a farmer or a minister/clergy, there may be other adjustments to determine what earnings are subject to SS taxes. But for most people, the big difference between Schedule C profits and the earnings taxed by SS is the 92.35% multiplier.
As mentioned above, there is a floor of $400 that has to be met before SS taxes are applied. So if your Schedule C profit was less than $433, it was below the limit to be taxed, and would show $0 in earnings taxed by SS.
AJ
3 Likes