- Additional Medicare Tax
- As per the new Additional Medicare Tax initiated in 2013, there is no inclusion of any additional Medicare Tax in this calculator. This additional Medicare Tax is computed on your annual earned income, not with the self-employment taxes. There may be some sort of diversity in this additional Medicare taxes depending on the tax filing status.
- Net farm income or loss
- It is about the farm’s net income or loss for the current year. Here you can include your farm’s net income or loss and any income from farm partnerships (with IRS Schedule F) as well. You may also need to compute your self-employment taxes under “Farm Optional Method” when your farm’s net income is too much low as per the Federal Tax regulations. It is the assumption of this calculator that you are not going to use ‘Farm Optional Method’ for determination of self-employment taxes.
- Net business income or loss
- Total amount of net income from businesses and partnerships. Such income is reported under IRS Schedule C and IRS Schedule K-1 respectively for sole proprietorships and for partnerships. You may need to pay self-employment taxes if you are working as a minister. But there is some variety in rates and procedure of determining self-employment tax liability. You need to be updated about the latest rates and regulations.
- Church employee income
- Church employee income is subject to tax exemption up to a certain limited amount as per each year’s tax regulation. You need to pay self-employment taxes if your church employee income exceeds the tax exempted amount.
- Employer paid income
- You can enter the amount of your annual employment wages and tips after the deduction of Social Security taxes. Your income may be subject to additional tax if there is any provision regarding additional payment of Social Security Taxes for exceeding a certain amount of income in the current year’s tax regulation.
- Net church employee income
- Your net church income is also subject to self-employment taxes. You may need to consult with your tax Consultant to know the updated tax rate in this regard.
- Self-employment income
It is the total self-employment income which is subject to Self-employment taxes. It is computed by the following formula:
Self-employment income = (net farm income or loss + net business income or loss) Ч 92.35%*.
You don’t owe any self-employment tax on your income if the calculated result is less than $400.
*92.35% is used for 2013 and It may change every year