Do you figure self employment on the gross or the net- and explain which is which please?

When we figure the wages on a self employed person by the hour, and then try to figure how much self employment they will need to pay on that, do we figure it on what we collect, or what they take home?

Do you figure self employment on the gross or the net- and explain which is which please?
If you're an employer, you issue wages to employees and file W-2s with the IRS. The W-2s indicate the withholding the employer sends to SS, Medicare, feds and state.





If these are independent contractors, you can't require that they be in office set hours, control their work, when they work, how they work, where they work. Gross pay is the total amount they receive, without any deductions. Net pay is what they receive after deductions, withholding. Generally there is no withholding from 1099 income which is filed on self employed individuals. Self employment taxes of medicare and social security are more than 15%, and then there's state and federal taxes, another good chunk of at least 15%.
Reply:it sure sounds like you're an employer and they are employees. You need to get the IRS' employers bulletin [search irs.gov website] and follow the computation steps they show you.
Reply:Schedule SE (for self-employed), line 2, starts out with one's net income or loss from Schedule C or CEZ. i.e., Starting out what's left after their permitted business deductions.





For details, try irs.gov.
Reply:You do not figure wages on a self employed individual. Wages are only paid to employees. If you pay a self employed person, it is their responsibility to calculate their own taxes.

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